IPO

Luckin Coffee Prices IPO At $17/Share

Chinese Coffee Co. Luckin Files For US IPO

Starbucks’ rival in China, Luckin Coffee, is set to price its initial public offering (IPO) at $17 per share.

Sources told CNBC that the company will also upsize its IPO to 33 million shares.

Luckin filed for an initial public offering (IPO) in the United States with a valuation of almost $3 billion since its last funding round. The company’s expected range was reported at $15 to $17 per share, and it plans to list on the Nasdaq this week under the ticker “LK.”

“Not since the dotcom bubble of 1999-00 has a company achieved a $3 billion public valuation less than two years after its launch,” said Kathleen Smith, a principal at Renaissance Capital, which tracks and invests in IPOs.

The company has been expanding rapidly, boasting 2,370 locations in 28 different Chinese cities. There are plans to open 2,500 additional stores this year, which means it could dethrone Starbucks as China’s biggest coffee company.

Luckin’s latest funding round raised $150 million from investors that include BlackRock. However, the company has not been profitable since it launched in 2017. In fact, its net loss to shareholders was $475.4 million at the end of last year, and the company had a total revenue of $125.27 million. For the first three months of this year, Luckin posted a net loss of $85.3 million.

It has also warned investors it may be some time before it is out of the red, saying that “we cannot assure you that we will eventually achieve our intended profitability.” Luckin also predicts higher expenses in the future from competition and regulation, as well as plans to increase brand awareness and expand its customer base. It has also invested heavily in discounts and customer deals to attract more customers.

“As a result, the key controversy is whether Luckin can generate sales in the absence of discounts,” Bernstein analyst Sara Senatore wrote in a research note last week.

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