– Luckin Coffee was down more than 70% on Thursday
– Chanos said that traders should avoid these Chinese companies like the plague
You can watch the video below:
Legendary short-seller Jim Chanos revealed the stocks that he is still betting against, even after the monster decline this year. Chanos said last Thursday that there are still overvalued stocks despite the sharp contraction in the equity market. He closed a bet against Chinese coffee chain Luckin (LK) on Thursday after first taking a short position earlier in the year on advice from fellow short-seller Carson Block and his firm, Muddy Waters Research.
It is important to mention that Luckin Coffee was down more than 70% on Thursday after it revealed in a government filing that its chief operating officer fabricated 2019 sales by about 2.2 billion yuan. Jim Chanos said that Luckin Coffee is a great example of — when people talk about banning short selling or restricting short selling. He also added that companies like Luckin represent an “overly aggressive” class of mega-growth companies that use underhanded methods to obscure expenses like compensation by paying their employees in equity. A lot of these companies are really not structurally growth stock and he also named Zoom Video (ZM), Teladoc (TDOC) and Clorox (CLX) as companies that have seen a burst in sales amid the stay-at-home trend. It is important to say that shares of Teladoc and Zoom Video advanced more than 80% this year.