Luckin Coffee leaves investors bitter with 39% drop from post-IPO high

A customer exits a Luckin Coffee outlet in Beijing, China, on Tuesday, Jan. 15, 2019. Photographer: Gilles Sabrie/Bloomberg

Luckin Coffee Inc.’s initial public offering was met with great fanfare — and then it wasn’t.

Shares of Xiamen, China-based Luckin Coffee soared as much as 53% to $25.96 on May 17, their first day of trading in the U.S. Since then, the stock has plunged 39% from that peak, even with a rally in the final half hour of trading Thursday that gave Luckin a 7.1% gain for the day.

Investors have questioned the company’s sacrifice of profits in favor of a cash-burn strategy at the same time as the rocky China-U.S. trade relationship weighs on global markets. The Chinese startup is seeking to overtake Starbucks Corp., opening more stores in two years than the industry giant has in 20 years.

Luckin’s 7.1% decline from its offering price of $17 per share — to $15.79 as of Thursday’s close — isn’t as bad as the performance from ride-hailing company Lyft Inc., which is down 20% from its offering price of $72 in late March. But it’s a frustration for market watchers such as Hedgeye Risk Management analyst Howard Penney, who last week projected 50% upside for the stock.

Bloomberg

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.