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Luckin Coffee (LKNCY)
OTHER OTC:LKNCY
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Luckin Coffee (LKNCY) AI Stock Analysis

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LKNCY

Luckin Coffee

(OTC:LKNCY)

Rating:81Outperform
Price Target:
Luckin Coffee's overall stock score reflects its robust financial performance, marked by impressive revenue and profit growth and a strong balance sheet. The company benefits from positive momentum in stock prices and favorable technical indicators, although the valuation is on the higher side, indicating investor expectations for future growth. The earnings call further supports a positive outlook with strong guidance and strategic initiatives, despite some potential cost and competitive challenges.
Positive Factors
Customer Growth
Client acquisition and activation were massive, with a significant increase in new customers and high customer retention rates.
Market Position
Luckin Coffee remains one of the analyst's sector top picks in 2025, trading at attractive discounts compared to peers.
Product Innovation
New products, including the Kale Fruit & Veggies Tea and fruit-based Americano, have been successful and are expected to drive growth.
Negative Factors
Cost Pressures
Surge in delivery expenses and potential subsidies to franchisees may put pressure on operating margins.
Operational Costs
Operating profit improved significantly, driven by meaningful operating leverage, despite challenges from increased share-based compensation and higher tax rates.

Luckin Coffee (LKNCY) vs. SPDR S&P 500 ETF (SPY)

Luckin Coffee Business Overview & Revenue Model

Company DescriptionLuckin Coffee Inc. engages in the retail services of freshly brewed coffee and non-coffee drinks in the People's Republic of China. It also offers hot and iced freshly brewed coffee, such as Americano, Latte, Cappuccino, Macchiato, Flat White, and Mocha, as well as specialty coffee based on market and seasonal trends; coconut milk latte products; tea drinks; pre-made beverages; and pre-made food items, such as pastries, sandwiches, and snacks. In addition, the company offers cups, tote bags, and other merchandises. It operates pick-up stores, relax stores, and delivery kitchens under the Luckin brand, as well as Luckin mobile app, Weixin mini-program, and other third-party platforms for third-party payment channels. Further, the company provides technical and consultation services; and manufactures materials for products. As of December 31, 2021, it operated 4,397 self-operated stores; 1,627 partnership stores; and 1,102 Luckin Coffee EXPRESS machines. Luckin Coffee Inc. was incorporated in 2017 and is headquartered in Xiamen, the People's Republic of China.
How the Company Makes MoneyLuckin Coffee generates revenue primarily through the sale of coffee and other beverages. The company's revenue model is centered around its mobile app, which streamlines the customer experience by allowing users to order and pay for products in advance, reducing wait times and enhancing convenience. A significant portion of its income comes from its extensive network of self-operated stores and pick-up locations, where customers can quickly collect their orders. Additionally, Luckin Coffee has formed partnerships with third-party delivery services to extend its reach and cater to the growing demand for food delivery in urban areas. The company's focus on cost control, competitive pricing, and aggressive expansion strategy has contributed to its ability to capture a substantial share of the Chinese coffee market. Furthermore, Luckin Coffee occasionally engages in marketing promotions and discounts to attract new customers and increase sales volume, which also contributes to its revenue streams.

Luckin Coffee Earnings Call Summary

Earnings Call Date:Jul 30, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue growth, significant store expansion, and increased customer engagement, with notable achievements in operational metrics and international expansion. However, rising delivery expenses and uncertainty in delivery platform subsidies present challenges.
Q2-2025 Updates
Positive Updates
Significant Revenue Growth
Total net revenues reached RMB 12.4 billion, representing a 47% year-over-year increase.
Record Store Expansion
Added 2,085 net new stores domestically, bringing the total store count to 26,117, maintaining market leadership in China.
Strong Operational Metrics
Operating profit increased by 62% year-over-year to RMB 1.7 billion, with operating margins expanding to 13.8%.
Increased Customer Engagement
Monthly average transacting customers grew 32% year-over-year to nearly 91.7 million, reaching a new all-time high.
International Expansion Milestone
Soft opening of 2 stores in New York, marking a significant milestone in Luckin's international expansion strategy.
Product Innovation
Launched over 20 freshly brewed beverages, including the popular Orange Americano, which surpassed 350 million cumulative cups sold.
Improved Supply Chain Efficiency
Broke ground on Luckin's fourth roasting facility, increasing total annual coffee roasting capacity to 155,000 tons.
Negative Updates
Rising Delivery Expenses
Delivery expenses increased by 175% year-over-year to RMB 1.7 billion, raising delivery expenses as a percentage of total net revenue to 14% from 7%.
Uncertainty in Delivery Platform Subsidies
The duration and scale of food delivery platforms' subsidies remain uncertain, impacting market dynamics.
Company Guidance
During Luckin Coffee's second quarter 2025 earnings call, significant growth metrics were highlighted, underscoring the company's robust performance. Total net revenues reached RMB 12.4 billion, marking a 47% year-over-year increase, fueled by a 46% rise in GMV to RMB 14.2 billion. The company reported a 13.4% same-store sales growth for self-operated stores and an impressive 62% year-over-year increase in operating profit to RMB 1.7 billion, with operating margins expanding to 13.8%. The aggressive store expansion strategy resulted in a net addition of 2,085 domestic stores, bringing the total to 26,117, including 16,903 self-operated and 9,214 partnership stores. Internationally, 24 new stores were added, totaling 89. On the customer front, Luckin Coffee saw a 32% year-over-year growth in monthly average transacting customers, reaching nearly 91.7 million, while the cumulative transaction customer base surpassed 380 million. The quarter also witnessed a healthy cash flow, with net operating cash inflow exceeding RMB 2.5 billion and a strong cash reserve of RMB 8.2 billion as of June 30, 2025.

Luckin Coffee Financial Statement Overview

Summary
Luckin Coffee displays strong financial health with solid revenue and profit growth, a stable and conservative balance sheet, and robust cash flow generation. The company's performance reflects effective management and strategic positioning in the restaurant industry. While the debt level is managed prudently, continued focus on maintaining growth and managing leverage will be crucial for sustaining this trajectory.
Income Statement
85
Very Positive
Luckin Coffee has demonstrated robust revenue growth, with a significant increase from CNY 24.9 billion in 2023 to CNY 34.5 billion in 2024, marking a 38.5% growth rate. The company maintains strong profitability with a gross profit margin of 59.1% and a net profit margin of 8.5% for 2024. The EBIT margin stands at 10.3%, and the EBITDA margin is 13.3%, indicating efficient operations and cost management. Overall, Luckin Coffee shows impressive growth and stable profitability.
Balance Sheet
78
Positive
The balance sheet reveals a solid equity base with a stockholders' equity of CNY 13.1 billion, up from CNY 8.1 billion in 2023. The debt-to-equity ratio is 0.46, indicating a conservative use of debt financing. The equity ratio is 56.5%, reflecting a strong capital structure. Return on equity is a healthy 22.5%, up from 35.0% in the previous year, showcasing effective use of shareholders' capital. The company appears financially stable with a prudent leverage strategy.
Cash Flow
82
Very Positive
Luckin Coffee's free cash flow has seen significant growth, from CNY 143.7 million in 2023 to CNY 1.9 billion in 2024, representing a remarkable increase. The operating cash flow to net income ratio is 1.44, highlighting strong cash generation relative to net earnings. The free cash flow to net income ratio of 0.66 indicates good conversion of profits into free cash flow. This strong cash flow position supports potential reinvestment and debt servicing.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue37.06B34.47B24.90B13.29B7.97B4.03B
Gross Profit15.65B20.36B14.01B5.28B2.73B311.42M
EBITDA5.56B4.59B5.11B2.40B1.69B-5.55B
Net Income3.54B2.93B2.85B488.25M578.54M-5.60B
Balance Sheet
Total Assets23.71B23.10B18.29B10.48B12.31B9.32B
Cash, Cash Equivalents and Short-Term Investments5.93B5.74B3.49B3.53B6.48B5.06B
Total Debt5.70B6.01B4.97B1.91B4.10B3.00B
Total Liabilities11.53B10.05B10.16B5.43B8.68B6.60B
Stockholders Equity12.18B13.05B8.14B5.05B3.63B2.66B
Cash Flow
Free Cash Flow3.09B1.93B143.73M-781.20M-49.77M-3.20B
Operating Cash Flow5.39B4.23B2.90B19.82M123.45M-2.38B
Investing Cash Flow-2.63B-3.21B-3.45B-798.05M337.00K-1.71B
Financing Cash Flow0.00333.60M0.00-2.28B1.51B4.03B

Luckin Coffee Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price37.00
Price Trends
50DMA
37.39
Negative
100DMA
34.97
Positive
200DMA
31.28
Positive
Market Momentum
MACD
-0.06
Positive
RSI
42.82
Neutral
STOCH
20.80
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LKNCY, the sentiment is Neutral. The current price of 37 is below the 20-day moving average (MA) of 37.78, below the 50-day MA of 37.39, and above the 200-day MA of 31.28, indicating a neutral trend. The MACD of -0.06 indicates Positive momentum. The RSI at 42.82 is Neutral, neither overbought nor oversold. The STOCH value of 20.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for LKNCY.

Luckin Coffee Risk Analysis

Luckin Coffee disclosed 108 risk factors in its most recent earnings report. Luckin Coffee reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Luckin Coffee Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
81
Outperform
$10.63B21.7430.41%41.95%88.82%
71
Outperform
$11.89B155.479.99%29.80%85.84%
67
Neutral
$7.77B56.4520.90%28.21%227.11%
66
Neutral
$98.47B37.47-47.07%2.77%0.60%-35.19%
62
Neutral
$1.96B10.9899.35%8.51%1.31%-1.46%
61
Neutral
$17.78B13.97-5.49%3.03%1.50%-15.71%
44
Neutral
$1.08B-21.95%5.74%-1.95%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
LKNCY
Luckin Coffee
36.37
16.33
81.49%
SBUX
Starbucks
88.02
-4.48
-4.84%
WEN
Wendy's
10.50
-5.22
-33.21%
BROS
Dutch Bros Inc
73.21
42.88
141.38%
SG
Sweetgreen
9.26
-22.37
-70.72%
CAVA
CAVA Group, Inc.
68.21
-42.66
-38.48%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Apr 30, 2025