Aug. 7 at 3:38 PM
$LKNCY $SBUX
Long-term expectations set the share price; business reality sets intrinsic value. For two years, intrinsic value for
$LKNCY has compounded while the price went sideways — because the price was set when expectations were extreme, and Luckin has spent those years growing into them. The market is marking Luckin to expectations reality has already consumed.
That's the setup for a re-rating. Luckin is already the largest coffee chain in China — 36,000+ stores, up 39% YoY — and closing on Starbucks globally by store count, in the fastest-growing major coffee market in the world. The US expansion — still nascent — is free optionality: a chance to compete with Starbucks in its home market, priced at roughly zero.
Over the next two decades, Luckin has a credible path to becoming the largest beverage retailer in the world by stores, revenue, and earnings. The question is no longer whether Luckin can meet expectations. It's whether the market has noticed that it already has.
