Muddy Waters Wins Twitter War With Citron Over Luckin
Muddy Waters Wins Twitter War With Citron Over Luckin Coffee
(Bloomberg) -- Muddy Waters Capital’s CEO Carson Block finally bested fellow short seller Andrew Left of Citron Research when Luckin Coffee Inc. disclosed Thursday that its board is investigating reports that senior executives and employees fabricated transactions -- sending its stock plunging. In late January, Block and Left engaged in a heated battle on Twitter over the Chinese coffee shop chain.
Luckin shares collapsed as much as 81%, the most intraday since its IPO last May.
Back on Jan. 31, Block tweeted that it had a short on Luckin after receiving what it called a “credible,” unattributed 89-page report that alleged accounting issues with the chain, and a broken business model. Less than two hours later, Left defended the coffee chain in a tweet of its own, saying the findings didn’t mesh with recent data indicating that Luckin’s business is “on fire” in China.
“There was a piece of research circulated by an anonymous third party and Muddy Waters ran with it, more power to him,” Left wrote Thursday in an email to Bloomberg News. “I saw the shareholders of the company and did some research and questioned the accuracy of the anonymous info. It turned out to be correct. Kudos to those who stuck with it.”
Read more: Louis Dreyfus Could Be Hit By Luckin Coffee’s Stock Plunge
Block reiterated Thursday that short sellers are needed in the market. Luckin short interest is about 35% of its free float, according to S3 Partners.
“Luckin shows exactly why we need short sellers in the market,” Block said in a statement emailed to Bloomberg. “We believed this report was credible when we read it, and that’s why we took a position. This is again a wake-up call for U.S. policymakers, regulators and investors about the extreme fraud risk China-based companies pose to our markets.”
Read more: Luckin Put Options Bought Days Before Rout Yield 1,500% Gain
Left isn’t the only loser. Some top holders of Luckin, as of the end of last year, included hedge funds Lone Pine Capital, which was Luckin’s biggest owner, Melvin Capital Management (as of March 24), Point72 Asset Management and Darsana Capital Partners. The funds all declined to comment.
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