China’s Luckin Coffee had its first day on the Nasdaq on Friday, closing at USD 20.38, 19.88% higher than its initial public offering price of USD 17.
Luckin, which was founded in June 2017 and began selling coffee four months later, raised USD 561 million in its IPO after selling 33 milion American depositary shares.
The startup has grown to become the second largest coffee chain in China, with 2,370 stores in 28 cities. Luckin had over 16.8 million cumulative transacting customers at the end of March 2019.
However, the company is still a way from being profitable. It incurred net losses of RMB 1.6 billion (USD 241.3 million) in 2018 and RMB 551.8 million (USD 82.2 million) in the first three months of this year, mainly due to high spending in marketing activities such as heavy discounts.
“We intend to further increase our brand awareness, expand our customer base and store network, and expect to continue to invest heavily in offering discounts and deals and other aspects of our business, especially sales and marketing expenses, in the foreseeable future as we continue to expand our store network and our product offerings,” said Luckin in its final IPO prospectus.
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