Luckin Stock Soars 13% on Strong Deliveries in Third Quarter
The Chinese coffee chain said the number of its customers grew nearly fourfold in the third quarter compared with the same time last year.
The stock in Luckin Coffee Inc. (Nasdaq: LK), a chain of coffee shops in China, surged 13% to $21.46 per American depositary share on Wednesday after it reported better-than-expected financial results for the third quarter.
Luckin said in the statement that its revenue in the three months ended September was $215.7 million, representing an increase of 540% from $33.7 million in the same quarter of 2018. The results were driven by an increase in the number of transacting customers, price and the number of products sold per transacting customer, according to the report. Sales of freshly brewed drinks brought in 74.3% of the revenue, Luckin said.
Net loss attributable to Luckin's shareholders was $74 million in the third quarter compared with a net loss of $67.8 million a year ago.
The company said its operating expenses were $298.3 million, nearly triple from $101.6 million in the third quarter of 2018. However, as a percentage of net revenues, expenses decreased to 138.3% in the third quarter from 301.7% in the same period of 2018. The company said in its report that it was mainly driven by increased economies of scale and the company's technology-driven operations.
In the third quarter, the average number of monthly trading customers grew nearly fourfold, while the number of Luckin stores has tripled, according to the report. Compared with the 540% increase in the revenue, it shows that the efficiency and profitability of its operations have been significantly improved.
Looking forward, Jenny Zhiya Qian, the chief executive officer of Luckin, said in the statement, "We are engaged in ongoing discussions with potential strategic partners to set up joint ventures in markets outside of China. We consider these initiatives as an evolution of our current business model and are part of our strategy to serve more customers."