Luckin Coffee (OTCPK:LKNC.Y) is back in the spotlight after accelerating its global expansion, from dense new store openings in China to fresh North American locations, while openly weighing a U.S. relisting to unlock higher valuation.
See our latest analysis for Luckin Coffee.
Despite the recent buzz around new stores and a potential U.S. relisting, the share price has cooled in the short term, with a 30 day share price return of minus 6.9 percent and a 90 day share price return of minus 11.3 percent. However, the 1 year total shareholder return of roughly 42 percent and 5 year total shareholder return above 300 percent suggest long term momentum is still very much intact.
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With the stock still trading at a steep discount to analyst targets despite double digit revenue and profit growth, investors now face a key question: is this a rare mispricing, or is the market already baking in the next leg of expansion?
With Luckin Coffee closing at $34.25 against a narrative fair value near $49.63, the storyline points to a sizeable upside gap driven by growth and margin expectations.
Ongoing investments in proprietary supply chain infrastructure such as the commissioning of the new Xiamen roasting facility and integration of existing plants are expected to enhance vertical integration, lower cost of materials as a percent of revenues, and drive expansion of gross and net margins over the long term.
Curious how fast expanding margins, double digit top line growth, and a future earnings multiple all converge into that valuation gap? The narrative lays out a detailed roadmap of revenue compounding, margin resilience, and a punchy earnings profile that aims to justify a premium style multiple without stretching assumptions beyond credibility.
Result: Fair Value of $49.63 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, accelerating store expansion and heavy reliance on delivery economics could quickly pressure margins and test how durable that upbeat valuation roadmap really is.
