Before her debut at Wall Street this Friday, "Chinese Starbucks" captured 561 million US dollars in public offering sales (OPV). Specifically, the company made a total of 33 million US stocks (ADS, English acronym) for $ 17. Each ADS supports a total of eight ordinary shares of Luckin Kave. Yesterday, these stocks rose by about 20%.
Luckin Coffee was established in October 2017 and currently has 2,370 sites under direct exploitation, making it the second largest company in China. The IPO is linked to the expansion plan.
But with the exception of explosive growth, Luck's coffee has defenders and defamers. On the one hand, there are those who claim to revolutionize the industry and generate a sustainable business. But critics warn that coffee in the Chinese market will never be able to overcome tea as the most commonly consumed infusion and re-examine its model on a very low price. In fact, until now your accounts are not profitable.
Battle with Starbucks
The format of the cantina offered by Luckin is diametrically opposed to that in Starbucks. Coffee for departure and places without chairs. In addition, there are no ATMs and have the ability to place online orders and withdraw orders at the store. His model is very low.
According to recent data, the US chain last year had almost 51% of the Chinese market, and is present in 150 cities. His flamboyant challenger barely had 2.1% and is in 28 cities. How then does this "David" think about winning "Goliath"? With the scale model, with aggressive expansion, which makes it a loser accumulation account. In invoicing, local Luckin increases only US $ 334 per day, while in Stabucks they earn five times more in that country.
Although more than 1.38 billion consumers in the market like China are doing everything possible, it is true that it is one of the countries with the lowest consumption per capita in the world.