Dear readers, one China-listed stock, Luckin Coffee stock which is often touted as the Starbucks of China has been doing very well recently on the NASDAQ. Luckin Coffee stock has risen from the around USD 18 per share in earlier November 2019 to the current trading price of USD 32 per share. The recent rally was due to the good set of earnings results of the company which have encouraged and excited investors.
Luckin Coffee stock was a recent IPO debutant on the US stock exchange. And my main areas of consideration of this stock is how the strategy of chasing scale over profitability in the middle term for this company will pan out and be sustained in the long run. I mean that there are some risks involved in such a rapid growth strategy based on scale, attempting to rival Starbucks in a predominantly tea-drinking country. These are the risks which investors in this stock should be willing to take especially so when there are also many other attractive stocks on the international bourse currently.
While investing in a rapidly growing stock is exciting and could be rewarding, for every multi-bagger stock that arise from such investment, there are simply many other similar stocks which go bust.
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