What happened: Chinese coffee chain Luckin is planning to raise up to $586.5 million in its US IPO according to its latest filing with the US Securities and Exchange Commission (SEC) on Monday. The company expects to offer 34.5 million shares priced between $15 and $17 apiece, giving it a valuation of between $3.48 billion and $3.95 billion. It had set a placeholder amount of $100 million in a filing submitted last month.
Why it’s important: Luckin Coffee is touted as a Starbucks competitor, but its business model differs from the coffee giant in many aspects, from user acquisition to marketing strategies. Adopting a growth path similar to many of China’s internet startups, Luckin’s strategy is to expand at a blinding pace, powered by a highly subsidized marketing model and a tech-forward purchasing experience. Its approach is largely influenced by its founders, formerly of Chinese car e-commerce platform UXIN Limited. As a result, the company is recording significant losses to the tune of nearly $79 million in the quarter ended March 31. The huge financial strain from such an aggressive expansion plan is showing: Luckin filed for its IPO just one week after a $150 million Series B+ in April that lifted its valuation to $2.9 billion. Starbucks CEO Kevin Johnson meanwhile told Bloomberg that the company is well-positioned for long-term growth in China, a reminder than the Seattle-based behemoth has deep pockets to fund its China stores, which have expanded at a rapid clip for the past 20 years.