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Luckin Coffee: A Promising Company Likely to See Major Upside
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Welcome to PrimeXBT’s professional analysis of the stock prices of Luckin Coffee Inc. which is a chain of coffee shops.
Fundamental Analysis and News:
Often labeled the Starbucks (NASDAQ:) of China, Luckin Coffee (NASDAQ:) had a strong 2019 thanks to large unit expansion, huge revenue growth, and significant margin improvements. Fortunately, all of those things will continue in 2020.
Luckin Coffee went from 2,000 to 4,500 coffee stores in 2019, and new management projects are set to hit 10,000 stores by 2021, so robust unit expansion will stick around in 2020. At the same time, each of those stores will experience huge comparable sales growth, backed by China's young consumers' love toward coffee consumption. Furthermore, all of this growth will come at a time when expense growth rates should lessen as the company's rate of expansion slows, so profit margins should meaningfully improve and losses should shrink.
In other words, 2020 will be an extension of 2019 in terms of the company sustaining big growth. As such, bulls will remain in control, and LK stock will continue to move higher.
Technical Analysis:
Luckin Coffee Inc. holds buy signals from both fundamental and technical analysis. Some negative signals were issued as well, and these may have some influence on near-term development.
The Relative Strength Index on the LK chart, for example, is flashing signs of bearish divergence. Its price's reached the resistance line of the ascending channel. On downwards corrections, there will be some support that’s coming from uptrend line and 23.6% Fibonacci — which is one of its major support levels.
As always, be careful, and don't forget about capital & risk management.
Stay tuned for future technical analysis, news, updates, and more from PrimeXBT.
Fundamental Analysis and News:
Often labeled the Starbucks (NASDAQ:) of China, Luckin Coffee (NASDAQ:) had a strong 2019 thanks to large unit expansion, huge revenue growth, and significant margin improvements. Fortunately, all of those things will continue in 2020.
Luckin Coffee went from 2,000 to 4,500 coffee stores in 2019, and new management projects are set to hit 10,000 stores by 2021, so robust unit expansion will stick around in 2020. At the same time, each of those stores will experience huge comparable sales growth, backed by China's young consumers' love toward coffee consumption. Furthermore, all of this growth will come at a time when expense growth rates should lessen as the company's rate of expansion slows, so profit margins should meaningfully improve and losses should shrink.
In other words, 2020 will be an extension of 2019 in terms of the company sustaining big growth. As such, bulls will remain in control, and LK stock will continue to move higher.
Technical Analysis:
Luckin Coffee Inc. holds buy signals from both fundamental and technical analysis. Some negative signals were issued as well, and these may have some influence on near-term development.
The Relative Strength Index on the LK chart, for example, is flashing signs of bearish divergence. Its price's reached the resistance line of the ascending channel. On downwards corrections, there will be some support that’s coming from uptrend line and 23.6% Fibonacci — which is one of its major support levels.
- Resistance Level: $46.8
- Support Levels: $44.4, 41.5, 38.5, 33.3, 28.65
- Volume: 29.515M
- Day's Range: 41.61 — 45.73
- Market Cap: 10 B
As always, be careful, and don't forget about capital & risk management.
Stay tuned for future technical analysis, news, updates, and more from PrimeXBT.
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