Luckin Coffee Witnesses Its Lucky Moment

Author: Butao Wang May 18, 2019 12:20 AM (GMT+8)

The shares climbed to as high as USD 25.96, giving it a market value of almost USD 6 billion, before falling to USD 22 as of this writing -- a 31%increase on its IPO price.

Luckin Coffee shop. Photo: FU Yingwei for EqualOcean

Luckin Coffee (瑞幸咖啡) opened at USD 25, a sharp increase on its anticipated initial public offering price of USD 17, in its Nasdaq debut on Friday (May 17). 

Luckin Coffee shares rose to as high as USD 25.96, capping its market value at almost USD 6 billion, before falling to USD 22 as of this writing.

The company raised around USD 695 million after pricing its offerings at the top of the expected price range of USD 15 to 17, in the biggest US float by a Chinese firm this year.

Meanwhile, Starbucks, the archrival of Luckin Coffee in China's coffee market, saw its shares inching up 0.7% to reach a record high of USD 79.45 on Friday.

The company has granted underwriters an option to purchase up to 4,950,000 additional ADSs within 30 days from the date of the final F-1 Form.

After the IPO, this coffee startup, nicknamed “little blue cup,” has run wild on the capital market, breaking a number of records. It is now the Asian company with the largest IPO on Nasdaq this year, the fastest growing unicorn worldwide.

Luckin has opened 2,370 stores in China, covering all the core business districts, and aims to open another 2,500 shops in 2019, bringing the total to 5,000.

Inspired by the success of Luckin Coffee, many companies have rushed into the coffee market.

On March 22, the new tea drink brand Heytea (喜茶) announced a plan to enter the coffee market, followed by similar moves by Nongfu Spring and Coca-Cola, which have initiated their own coffee plans as well.

Despite the IPO glorious moment, Luckin Coffee still needs capital to support its expansion strategy. In the registration statement it revealed earlier, its net income in 2018 was CNY 840 million, with a net loss of CNY 1.62 billion. In comparison, its net income as of March 31, 2019 stood at CNY 480 million, with a net loss of CNY 550 million.