The Lead: Why Luckin
The Lead: Why Luckin Coffee Stock has a the rare chance to make a comeback after being delisted.
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About one year ago, Luckin Coffee was trading at $50/share and was being taken highly seriously as a rival for Starbucks. After a massive accounting scandal, where it was reported that Luckin fabricated their sales figures and lied to investors about the true amount of their losses, the stock crashed. A lot of people kicked Luckin to the curve and nobody talks about it now on youtube but I never completely forgot this stock.
Now after a month where Luckin Coffee has doubled in share price and investors see a light at the end of the tunnel, I want to take another look with you guys at Luckin to see if there is ever a circumstance that could make this company worth investing in.
Luckin was billed as the Starbucks of China, but the futuristic version of Starbucks. The company is based around mobile technology and efficiency. The locations are cheap, easy to set up and lightly staffed. They bet on mobile savvy consumers, the younger coffee drinking generation.
Scandal and Fallout:
Scandal: In early 2020, there was an internal company investigation that revealed the Luckin COO Jian Liu and employees fabricated $310 million of company transactions. That amounts to around 40% of projected sales. As a result of this scandal, Luckin stock fell over 90% from high’s in the beginning of the year.
Investors assumed that Luckin would get slammed with punishments from regulatory agencies that would drive the company into bankruptcy and send the shares into worthless level territory.
It looked like they would. Luckin got delisted on June 26, 2020 from the NASDAQ and shuffled to the over the counter markets which are much less traded and harder to trade.
Luckin Stock fell from a market cap of nearly $100B to just over $2B at the end of the scandal, something like a 98% drop in share price.
The Current Status of Luckin Stock:
Here’s where we’re at with Luckin.
Luckin Coffee reported having around $780m cash on its balance sheet as of late June, 2020. Subtract around $190m for fines and penalties and that leaves the company with $590m in cash.
Luckin essentially solved a lawsuit instead of being financially crushed beyond repair for lying to investors. So now what is really left of Luckin and their infrastructure and presence in China?
1) Luckin Coffee Achieved overall profitability at the store level.
a. More than 60% of the stores that Luckin has are profitable individually at a store level.
2) The Joint Provisional Liquidators examination of Luckin say the company should become cash flow breakeven in the first half of 2023.
3) Sales reach between 1.01B and 1.88B by 2023 that will be up $603m from this year.
#LUCKINSTOCK #LUCKIN #LKNCY
?Disclaimer: I am not a financial advisor. These videos are entertainment purposes only. Any stocks discussed on the video are not to be considered “investment recommendations”. Unless investments are FDIC insured, they may decline in value and/or disappear entirely. You (and only you) are responsible for the financial decisions that you make.
Love Luckin Coffee!!! I'm up 237% @ $2.89 a share. They are too big to fail, too many employees and stores. The SEC gave them a slap on the wrist (they do not want LC to fail). I'll be buying more tomorrow and won't sell it until it reaches the $30's, if then.
The NFT option is a literal game changer. Ultra looks great, I will have to check out what they are up to in the future. I would like to sponsor your videos and quite possibly your patreon broadcasts going forward if that's something you'd be interested in. Keep up the great work this is great to follow.
Also as we wait for the Coffee ☕️ numbers to go up , they sell a huge amount of tea drinks as well !
I'm excited to see this project grow. I'll be watching.
Very happy ?? ??♥️❤️
Luckin Coffee (瑞幸咖啡 $LK)
Luckin Coffee (瑞幸咖啡 $LK) Stock is still in a T12 trading halt. However, I will attempt to valuate the company based on the facts we currently know - and also by making my own assumptions about the extent of the fraud and consequences for the business. What could be a valuation for Luckin Coffee right now? What could be the future of the stock price, when we analyse their business?
In this video I will guide you through my detailed napkin business case and try to find answers.
You can find the Excel sheet for download either on Patreon or via https://network.dongxii.com/
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Thank you for the research and clear presentation
like your video, thanks for your insight research
I can do simpler market research. Have you been to China? Have you tried Luckin Coffee? If the answer is no then dont invest in the stock. I live in Boston MA and Chinese people only eat at authentic restaurants in Chinatown and not the Americanized Chinese fast food joints in other neighborhoods. How many Chinese investors do Luckin Coffee have? Why is it trading in US stock markets?
Let us know in the comments which stock price you are aiming for, in case Luckin will trade again. Are you aiming for a high multiple (still convinced?) or you think it is properly valued with the current low multiple due to the uncertainty, missing trust etc.?
the convertible bonds are trading up to 32.5 now from 10 in early april, i see some saying this may indicated a value of 16+ being that they're $50 convertibles. Do you have any insight on this?
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