Starbucks’ China rival Luckin seeks to raise up to $586.5 million in IPO – Reuters

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.

Start your free trial now.

Get instant access to all our premium content, archives, newsletters, and online community.

Monthly Membership

Yearly Membership

What you get

Full access to all premium content and our full archives

Members'-only newsletters

Preferential access and discounts to all TechNode events

Direct access to the TechNode newsroom

Start your free trial now.

Get instant access to all our premium content, archives, newsletters, and online community.

Monthly Membership

Yearly Membership

Emma Lee

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com.