Investment Thesis
Despite the fast expansion and improved financial performance, we are still skeptical about Luckin Coffee (NASDAQ: LK) in terms of long-term profitability. They still need to prove the sustainability of growth when sales and marketing expenses are down to the normal level.
Quick Summary of Q3 Results
The Q3 results from LK are considered surprisingly good:
- Total net revenues grew 540.2% YoY to RMB1,541.6 million (US$215.7 million) in the third quarter. Total net revenues from products in the quarter were RMB1,493.2 million (US$208.9 million), representing an increase of 557.6% YoY.
- Total number