LKNCY - Luckin Coffee: Upside Ahead But Competition Risk Remains Elevated
2024-02-05 06:46:13 ET
Summary
- Luckin Coffee's share price has nearly doubled since 2022, reflecting investor confidence in its turnaround post-accounting fraud.
- A competitive pricing strategy appears to help increase market share during the economic downturn in China.
- I project a +30% market share in FY 2024, with a 1-year price target of $34.72. I see moderate competition risk, though still overshadowed by a 65% upside potential, in my view.
Luckin Coffee (LKNCY) is a Chinese coffee chain founded in 2017 with a digital-first business model that had been rapidly growing to overtake Starbucks ( SBUX ) before accounting fraud issues led to bankruptcy . Since 2022, they have been rebuilding trust under new management....
Luckin Coffee: Upside Ahead, But Competition Risk Remains Elevated