Michael Norris discusses Luckin Coffee’s IPO and how much of the business actually makes sense.
The IPO filing comes a week after the company’s $150 million Series B+ that is raised at a valuation of $2.9 billion.
Shares slid overnight after losses hit nearly $100 million in the quarter.
Luckin is under financial pressures as the startup coffee chain is showing signs of overheating.
Its rapid, capital-fueled growth and widening losses leave the question of sustainability open for debate.
Chinese-style noodle chain restaurants first became tech investor darlings in 2021 when the industry faced tightened regulation.
Luckin doubled its valuation to US$2 billion after a recent funding round.
Luckin Coffee and Tencent have been partners since Sept. 2018.
The company said it operates 100% under the direct sales model and has not accepted franchising of any form.
Luckin Coffee, the coffee shop startup using market acquisition tactics borrowed from China’s internet companies, has written an open letter to Starbucks accusing it of monopolistic practices in the country and proposing a possible lawsuit, according to Tencent News (in Chinese). Luckin has taken issue with Starbucks’ exclusivity rights with property owners and putting pressure […]