Luckin Coffee Shares Soar 50% on IPO Launch | Financial Buzz

Luckin Coffee Shares Soar 50% on IPO Launch

Luckin Coffee Inc. (NASDAQ: LK) launched its initial public offering on the Nasdaq Stock Exchange on Friday. The China-based coffee company saw its shares soar by over 50% on Friday morning following its listing.

The coffee company priced its shares at the higher range of USD 17 per share. The first trade occurred at 11:08 AM Eastern at USD 25. Luckin had over 15 million shares trading shortly afterwards.

In late April, Luckin announced that it has raised USD 550 Million, including a USD 200 Million Series A last year and a USD 200 Million Series B round in December. Despite Luckin’s rapid expansion, the Company revealed in the filings it lost more than USD 240 Million. Luckin projects that it could lose even more in the future.

In 2018, Luckin reported net sales of USD 125.3 Million and a net loss of USD 241.3 Million.

Luckin was founded back in October 2017 and operates in over 1,700 locations across China. The rapid expansion of the coffee chain now rivals Starbucks (NASDAQ: SBUX) within China. Despite Luckin’s dominance in China, Starbucks still maintains a larger global presence.

Starbucks operates in 30,000 locations across the world. Specifically in China, Starbucks has approximately 3,600 stores across 150 cities.

Luckin said it intends to double its store locations by the end of the year, which would overshadow Starbucks’ number. On the other hand, Starbucks is looking to double its store locations in China over the next five years.

While the two companies dominate within their respective marketplaces, the two have slightly different business models. Starbucks primarily operates in brick-and-mortar locations where customers order on the spot and pick it up. Meanwhile, Luckin predominantly operates as a tiny booth where customers can place online orders for delivery or pickup.

Starbucks has already launched a mobile app, however, customers can only order online and then pickup within the store. Although, Starbucks has partnered with Uber Eats to deliver coffee to select cities across the U.S. such as San Francisco, Los Angeles, Chicago, Boston, and New York.