is Luckin Coffee a good investment?
You can check the answer of the people under the question at Quora “how to invest in coffee stocks“
is Luckin Coffee a good investment?
You can check the answer of the people under the question at Quora “how to invest in coffee stocks“
Based upon my research, Hussain, unless you have $1500 to $1700 (or more) to take a “flyer” on buying 100 shares (or more) on Luckin, you should STAY AWAY FROM IT. There are too many negatives in its information packet right now.
Everything about it is a large risk. The world as a whole not withstanding, relations just between China and the USA are not at a good point or situation right now and may not be for some time. Americans, at least, are more apt to stick with Starbucks and other domestic American chains.
Only the ugly “big banks,” like Morgan Stanley, etc. are backing this, and as we have seen the big banks are the enemies of the American people and for the most part people around the world.
You would be better off to invest your money in Starbucks or some other company that does not have a strong stake in China. Coffee is not going to take hold in China as it has in America. The Chinese are traditionally a tea drinking people.
Luckin Coffee (LK) runs a chain of coffee shops in China. LK is China’s second largest and fastest-growing coffee network, in terms of number of stores and cups of coffee sold. It went public earlier this month and listed on the Nasdaq exchange. The current market cap is USD 4.17bn.
The company commenced operations in October 2017. The store growth trajectory of the company is quite astounding, going from just 9 stores as of December 31, 2017 to 2,370 stores as of March 31, 2019, which is just 15 months or so.
Highlights
* China’s coffee market is highly under-penetrated
* LK’s focus is on pick-up stores with limited seating, which it claims results in low rentals and store interior costs
* Stores are located in areas with high demand for coffee, such as office buildings, commercial areas /university campuses.
The Key Operating Metrics of the company are quite impressive:
Strangely their IPO prospectus does not name a single competitor, though I understand Starbucks is a key competitor in China. My concern is, when in many segments of food retail, US companies have established a big presence in China (companies such as Domino’s Pizza, Pizza Hut, Starbucks and many more), will a local Chinese company be able to stand up to the foreign competition?
The financials of the company are in bad shape, with the company remaining EBITDA negative as of date. This is a concern, but many businesses which scale rapidly, are unable to keep an eye on profits. So, essentially the revenue growth comes at the cost of margins and profitability.
The balance sheet is not in great shape either. The operating cash flows are negative.
I guess I would call this a Coffee Chain Startup/ Unicorn – losses on the balance sheet and a val…
Regardless of global and political volatility, IPO’s are risky at best.
I was advised many years ago that our stock market is nothing more than legalized gambling.
If you feel that the IPO cost is a good value, and OBVIOUSLY you want to profit on the upswing over time, go for it. Do your research and decide whether or not the IPO will be good , for YOUR portfolio.
Recent IPO’s for Lyft and Uber , offer some insight , whether or not , Luckin Coffee is a good IPO “bet”.
I never heard of Luckin Coffee other than it’s a Chinese coffee company. At a glance, it’s very hard to tell how well the company is doing. First of all, the company doesn’t pay out dividends. That is an important criteria for me before I even look at all the company information. I personally think at this time, Luckin Coffee is a bad investment. If you are new to investing. There are better companies out there turning a profit and paying dividends. Two strong companies in mind are Dunkin Brands and Starbucks. Both companies pay dividends. Please do your homework before investing.
Is Luckin Coffee a good investment?
It was for me.
I bought it low at 14 and sold it high at 25.86 for a nice profit of double. You can do the same if you buy things low and sell them high.
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