LK - Luckin Coffee Inc.

NasdaqGS - NasdaqGS Real Time Price. Currency in USD
+1.58 (+8.14%)
At close: 4:00PM EDT

20.73 -0.26 (-1.24%)
Pre-Market: 9:19AM EDT

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Previous Close19.41
Bid20.65 x 800
Ask20.70 x 800
Day's Range19.35 - 21.00
52 Week Range13.71 - 25.96
Avg. Volume5,642,767
Market Cap4.941B
Beta (3Y Monthly)N/A
PE Ratio (TTM)N/A
Earnings DateN/A
Forward Dividend & YieldN/A (N/A)
Ex-Dividend DateN/A
1y Target Est24.59
Trade prices are not sourced from all markets
  • Getting technical: AMZN sprouting bullish wings; feeling lucky with Luckin Brands (LK)
    Yahoo Finance Videolast month

    Getting technical: AMZN sprouting bullish wings; feeling lucky with Luckin Brands (LK)

    Joining Yahoo Finance's Jen Rogers and Myles Udland is Brian Shannon, CMT and founder of It's been exactly four weeks since Luckin's IPO and the charts are looking bullish. Amazon is showing strength as well.

  • MarketWatch4 days ago

    Starbucks opens first express service store in Beijing

    Starbucks Corp. said Friday that it has opened its first express retail location, Starbucks Now, in Beijing. The store, located in the city's financial district, offers limited seating along with mobile-order-and-pay and delivery service. The limited-seating format is one that Chinese competitor, Luckin Coffee Inc. , also offers at the majority of its stores. Starbucks stock has soared 78% over the past year while the S&P 500 index has gained 7.4%. Luckin Coffee, which went public in May, is up 6.4% over the last month.

  • Barrons.com4 days ago

    Selling Tea in China Is No Joke. Luckin Coffee Is Trying Anyway.

    Luckin Coffee launched a line of tea-based drinks on Monday in hopes of tapping new growth and a larger market.

  • Reuters13 days ago

    UPDATE 2-China's Centurium Capital raises over $2 bln from GIC, Temasek, others

    China's Centurium Capital, a big backer of domestic startup Luckin Coffee, said it has raised more than $2 billion in its debut fund, giving the private equity firm more firepower to cut deals involving the world's second-largest economy. The firm, co-founded by the former head of Warburg Pincus Asia Pacific, David Li, said in a statement on Wednesday that Centurium Capital Partners 2018 L.P. raised the sum in U.S. dollars. The fund secured strong interest from global investors, known as limited partners (LPs), such as pension funds, sovereign wealth funds and funds-of-funds, it said.

  • Biggest IPO Wave in 5 Years Will Keep Rolling as New Stars Emerge
    Investopedia21 days ago

    Biggest IPO Wave in 5 Years Will Keep Rolling as New Stars Emerge

    The slate of IPOs in May alone have already raked in $15 billion, marking the most raised in one month since September 2014.

  • 6 Stocks Ready to Bounce on a Trade Deal
    InvestorPlace27 days ago

    6 Stocks Ready to Bounce on a Trade Deal

    When it comes to the stock market, U.S. President Donald Trump's Twitter (NYSE:TWTR) account may be the crystal ball which can help investors predict what's going to happen next.Back in early May, Trump fired off a tweet in which he said that China "broke" the trade deal, and that new tariffs would be coming soon. That tweet shook markets. Stocks fell. Over the next month, trade tensions between the U.S. and China heated up. Stocks kept falling. From Trump's tweet to the end of May, the S&P 500 shed more than 6%.Now, in late June, Trump has fired off another trade-related tweet. But this one has a far more positive tone. In this tweet, Trump said that he and China President Xi Jinping are going to have an "extended meeting" next week at the G-20 Summit in Japan. That tweet surprised markets, since most investors presumed the two nations were on such disagreeable terms that a meeting at G-20 wasn't going to happen. Now, it's going to happen. That's good news for markets. The S&P 500 responded by rallying more than 1% that same day.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn other words, a Trump tweet was the very thing which started a big meltdown in markets in May, because that tweet basically said trade talks are not going well. Now, a different Trump tweet could be the very thing which starts a melt-up in markets in late June, because this tweet basically says that a trade deal could be coming soon. * 7 Value Stocks to Buy for the Second Half With that in mind, let's take a look at six stocks that are ready to bounce in a big way in the event a trade deal does get struck between the U.S. and China sometime soon. Stocks to Buy for a Trade War Bounce: Alibaba (BABA)Source: Shutterstock If the U.S. and China strike a trade deal in the foreseeable future, one stock that will fly higher is Alibaba (NYSE:BABA).Being the juggernaut in the Chinese e-commerce landscape, Alibaba goes as the China economy goes. When China's economy is firing on all cylinders, so is Alibaba. Revenue growth is big, margins are healthy and BABA stock moves higher. On the flip side, when China's economy is slowing, Alibaba slows, too. Revenue growth decelerates, margins compress and BABA stock moves lower.China's economy was firing on all cylinders in 2017. That's why Alibaba stock went from $90 to $180. But, China's economy slowed in 2018. That's why BABA stock fell from $180 to $130. Shares rebounded to $190 in 2019 as China's economy picked up steam against the backdrop of improving trade relations. But trade relations deteriorated in May, and since then, BABA stock has dropped back to $160.It looks like trade relations are back on the "getting better" path. So long as they remain on that path, BABA stock will move higher. In the event that a trade deal is actually struck, this stock will soar to levels above $200. iRobot (IRBT)Source: Shutterstock One under-the-radar growth stock which is set to win big if the U.S. and China strike a trade deal is iRobot (NASDAQ:IRBT).iRobot manufactures and sells consumer household robotic products, with the present focus on robotic vacuums. This is a growth market. Low-level automation is the first step of the automation revolution, and iRobot is king in the low-level-automation world, creating machines which automate simple tasks that most people don't like to do (vacuuming, mowing the lawn, cleaning the pool, so on an so forth). As such, as the automation wave gains mainstream traction over the next several years, household robotic adoption will rise rapidly and iRobot's sales and profits will march higher. That growth will ultimately push IRBT stock higher, too.This secular growth narrative has hit a snag with the trade war. iRobot is a U.S. company. One of its biggest growth markets is China. As such, iRobot is at the epicenter of the U.S.-China trade war, and every tariff hike back and forth results in higher input prices for the company. In short, trade war tensions between the U.S. and China have put the secular iRobot growth narrative on hold. * 5 Stocks to Buy for $20 or Less If a deal is struck between these two countries, that holding period will end, and it will be replaced by resumption of the iRobot secular growth narrative. That resumption will put IRBT stock back on a winning path. Luckin Coffee (LK)Source: Shutterstock One growth-oriented way to play a trade war resolution is through buying shares of Luckin Coffee (NASDAQ:LK).Luckin Coffee is China's brand new, hyper-growth coffee shop chain, which is surging throughout China using a unique, small-store, digital-first model that resonates with China's millennial urban consumers. At scale, this company could one day turn into the Starbucks (NASDAQ:SBUX) of China. Starbucks has a $100 billion market cap. Luckin's market cap is at $5 billion. As such, the runway for long term growth in LK stock is quite promising.But, this is a China growth story, and if the China economy isn't doing well, the LK stock growth narrative won't be smooth. China's economy won't do well if trade tensions continue to escalate. But if a trade deal is struck, China's economy will get back to firing on all cylinders. If that happens, the Luckin stock growth narrative will fire on all cylinders, too.As such, a trade war resolution could be the exact catalyst LK stock needs to get started on a long-term winning path. Nike (NKE)Source: rodrigofranca via FlickrOne global apparel giant that stands to benefit tremendously from a trade deal is Nike (NYSE:NKE).Nike is the world's leading athletic apparel brand. As the world's leading athletic apparel brand, the company has a ton of exposure to China, trade and tariffs. Roughly 26% of Nike brand footwear and apparel is manufactured in China, and the Greater China geography accounted for 15% of Nike brand sales last year. As such, Nike has broad exposure to both U.S.-China tariffs and a trade-related China economic slowdown.Remove these issues, though, and Nike looks really good right now. The company is simultaneously benefiting from a secular rise in global athletic apparel adoption and growing share in that market using rapid product innovation and a shift to a direct-sales model. * 7 Top-Rated Biotech Stocks to Invest In Today Broadly, then, if trade war risks disappear, NKE stock should fly higher. The rest of this growth narrative is on fire right now. Remove the one headwind, and that creates runway for big gains in Nike stock. Foot Locker (FL)Source: Shutterstock Along the same lines as Nike, another athletic apparel stock that should run higher if a trade deal is struck is Foot Locker (NYSE:FL).Things look good at Foot Locker right now. After spending a few quarters below zero, comparable-sales growth is back in positive territory again, and comps were up nearly 5% last quarter. Physical stores are comping positive. Digital sales are growing at a double-digit pace. Gross margins are expanding. Profits are up.Net net, the numbers at Foot Locker are pretty good, supported by a secular rise in athletic apparel adoption and stabilization in the physical and wholesale retail markets. The only problem here is the trade war. Unfortunately, it's a big problem. Owing to the athletic footwear market's broad exposure to imports from China, Foot Locker presently finds itself at the epicenter of the trade war. The higher tariffs go, the worse things will get for Foot Locker.But, if those tariffs go away entirely, things will get way better for Foot Locker. FL stock is cheap enough right now (8 times forward earnings) that if things do get better, the stock will bounce in a big way. Intel (INTC)Source: Shutterstock One sector that has been killed by the U.S.-China trade war is the semiconductor market, and one stock in that market that could win big in the event of a trade war resolution is Intel (NASDAQ:INTC).The semiconductor space has a lot of U.S.-Asia trade exposure, with big customers and manufacturers on both sides of the Pacific Ocean. Thus, as trade tensions between the U.S. and China escalated, global semiconductor demand weakened and production costs became an issue. Consequently, semiconductor stocks dropped.Intel was one of those stocks. As one of the world's largest semiconductor companies, Intel has huge exposure to China. But a trade resolution between the U.S. and China should re-stoke demand and ease rising cost pressures. If that happens, Intel's revenue and margin growth trajectories will meaningfully improve. * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 Much like FL stock, INTC stock is cheap enough today (10x forward earnings) that any positive news on the trade front should put significant upward pressure on shares.As of this writing, Luke Lango was long BABA, IRBT, LK, NKE, FL, and INTC. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Value Stocks to Buy for the Second Half * 7 Hot Stocks to Buy for a Seemingly Sleepy Summer * 6 Chip Stocks Staring At Big Headwinds in 2019 Compare Brokers The post 6 Stocks Ready to Bounce on a Trade Deal appeared first on InvestorPlace.

  • GlobeNewswire27 days ago

    Luckin Coffee Inc. Announces Full Exercise of Over-Allotment Option in Initial Public Offering

    BEIJING, China, June 19, 2019 -- Luckin Coffee Inc. (“Luckin Coffee” or “the Company”) (NASDAQ: LK), a technology-driven new retail provider of coffee and other products, today.

  • Barrons.com28 days ago

    Starbucks Investors Don’t Need to Worry Much About Luckin Coffee, the ‘Starbucks of China’

    The major competitor to Starbucks in China, Luckin Coffee, has been moving up and up, but one analyst doesn’t think Starbucks shareholders have much to worry about from the rise of the Chinese coffee chain that went public in the U.S. in May.

  • 5 Stocks to Buy for $20 or Less
    InvestorPlace29 days ago

    5 Stocks to Buy for $20 or Less

    A good rule of thumb in the stock market is to not buy stocks just because they are cheap or low. Cheap stocks, or stocks that trade at discounted valuation multiples, are often cheap for a reason. The same is true for low-price stocks, or stocks that trade in the under-$10 and under-$20 ranges.As such, when dealing with super cheap stocks or super low-price stocks, investors should exercise caution. These stocks are at these levels for a reason, and it's not usually a good reason.Having said that, this group of beaten up stocks does offer significant upside potential. These stocks are priced for death. Thus, if anything good happens, these stocks will rise by a lot, and quickly. But you need something good to happen first, and something good only materializes for a handful of these sub-$10 and sub-$20 stocks.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Top-Rated Biotech Stocks to Invest In Today With that in mind, I've put together a list of high quality stocks in the under $20 bucket which are supported by healthy fundamentals, and have a realistic opportunity to rally in a big way from their current prices. Which stocks made the list? Let's take a deeper look. Luckin Cofffe (LK)Source: Shutterstock Stock Price: $18The first stock on this list is freshly public Luckin Coffee (NYSE:LK), the hyper-growth China retail coffee chain which many dub the Starbucks (NASDAQ:SBUX) of China.The core growth narrative here is very favorable. Luckin is the fastest growing and second largest retail coffee operator in China, and is on track to soon become the largest player in the space. At the same time, the China economy is rapidly urbanizing and expanding, and the coffee market in that economy is surging higher, rising by over 30% last year. That makes Luckin the hyper-growth leader in a rapidly expanding market, a combination which ultimately implies tremendous long-term growth potential.The numbers underlying LK stock are equally favorable. Luckin Coffee has a market cap of about $4 billion. Starbucks has a $100 billion market cap. To be sure, Luckin Coffee will never be as big as Starbucks. But, if the company does become a leader in what projects to be a $25 billion-plus China retail coffee market, then today's $4 billion market cap looks like a steal.Starbucks has about 40% market share in the U.S. Luckin can maybe do 20% share in China. A 20% share in a $25 billion market implies $5 billion revenue potential. On 10% operating margins and after a 20% tax rate, that equates to $400 million in net profits. A market average 16 multiple on that implies a potential future valuation target of over $6 billion. That's way bigger than $4 billion. Aurora Cannabis (ACB)Source: Aurora Cannabis Stock Price: $7.50In the under $10 category, one of the more attractive stocks to buy is undervalued Canadian cannabis producer Aurora (NYSE:ACB).No matter which way you slice it, Aurora is one of the more undervalued pot stocks in the market. It's cheaper than most peers on a trailing sales basis, forward sales basis, volume basis, and on pretty much every other important operating metric. That relative cheapness in ACB stock comes despite Aurora having many strengths. Aurora is the second largest player in the Canadian cannabis market behind Canopy Growth (NYSE:CGC), is one of the fastest growers in the market, is behind some of the top selling products across Canada and has one of the largest production capacities.Why, then, is ACB stock cheap relative to peers? Balance sheet. Cronos (NASDAQ:CRON) and Canopy are loaded up with billion dollar investments from consumer staples giants, which simultaneously shore up their balance sheets and give those companies ample firepower to grow rapidly. * The 7 Best Tech Stocks to Buy for the Second Half of 2019 Aurora has no such investment. But if the stock stays this cheap for long, it's only a matter of time before they get a big investment. Also, the company is tapping into the debt markets to raise sufficient capital to compete, meaning that in the big picture, this valuation disconnect has no reason to exist. If it gets wiped out -- as it should -- ACB stock could fly higher. Vipshop (VIPS)Source: Shutterstock Stock Price: $7.75Another hidden gem in the under $10 category is Chinese e-retailer Vipshop (NASDAQ:VIPS).Although China's economy is slowing, it is still growing at a robust mid single digit rate. At the same time, the digital economy remains red hot, with e-retail sales projected to rise 30% this year. Vipshop is at the heart of this robust e-retail sales growth narrative. Further, Vipshop is a discount retailer, and if the U.S. retail landscape has shown us anything, it is that off-price retail is a winning strategy. See the stocks of Ross Stores (NASDAQ:ROST), TJX (NYSE:TJX), Walmart (NYSE:WMT) and Five Below (NASDAQ:FIVE), versus the stocks of Nordstorm (NYSE:JWN) and Macy's (NYSE:M).Thus, Vipshop finds itself at the convergence of two favorable trends. On one end, you have robust growth through expansion of China's e-commerce landscape. On the other end, you have sustained popularity through an off-price retailing strategy.Net net, that means Vipshop projects as a sustained big grower for the foreseeable future. That sustained big growth should shoot VIPS stock materially higher from today's sub-$10 price. American Eagle Outfitters (AEO)Source: Mike Mozart via Flickr (Modified)Stock Price: $17A bunch of mall retailers trade in the under $20 range. But, only one retail stock is really worth buying at these levels and that stock is American Eagle Outfitters (NYSE:AEO).Put simply, American Eagle is a winning retailer. They are succeeding where others are not. American Eagle has transformed into the king of the denim category, and denim has made a strong comeback over the past several years. At the same time, American Eagle's Aerie brand has been one of the hottest stories in retail because the brand has aligned itself with body positivity tailwinds. Because of these favorable dynamics, American Eagle demand has remained resilient in the face of broader mall retail demand turbulence, which has allowed American Eagle to report far better than peer numbers over the past several quarters.The numbers speak for themselves here. American Eagle has rattled off 17 consecutive quarters of comparable sales growth, and 6 consecutive quarters of 5%plus comparable sales growth, including a 6% comp last quarter. In the overlapping period, peer mall retailers Nordstorm, J.C. Penney (NYSE:JCP), Gap (NYSE:GPS), Express (NYSE:EXPR) and many others pretty much all reported negative comps. The norm was also big gross margin compression. American Eagle's gross margins only fell back 30 basis points. * 5 Red-Hot IPO Stocks to Buy for the Long Run Broadly, American Eagle Outfitters is significantly outperforming its retail peers. This is nothing new. This has been the trend for a long time. It also projects to remain the trend for the foreseeable future. Consequently, if you're gonna buy a mall retail stock in the under $20 category, AEO should be your first choice. Ford (F)Source: Jens Mayer via Flickr (Modified)Stock Price: $10The last stock on this list is another stock in the sub-$10 category which has compelling upside in a medium to long term window.We all know Ford (NYSE:F), the U.S. automotive giant that makes great pick-up trucks and a variety of other good cars. Naturally, that sounds like a stable business, since auto demand is fairly stable, and Ford has been a relevant player in that space for what seems like forever. But the narrative supporting Ford stock has weakened over the past several years, mostly because the auto space is shrinking thanks to ride-sharing, and because Ford is losing share thanks to the emergence of electric vehicles.These headwinds are very real. But they are also overstated. Sure, some urban residents will chose to forego car ownership as a result of increased ride-sharing prevalence. But most won't, because no matter how good ride-sharing gets, it won't ever parallel the convenience of car ownership. Further, electric vehicles are ramping. But, Ford isn't just sitting on its hands while consumption pivots. They are pivoting into the EV space, too, and the company should be able to command respectable EV share at scale.Overall, then, the fears dominating the Ford narrative at present are overstated. Ultimately, they will pass, and when they do, Ford stock will rally from today's depressed levels.As of this writing, Luke Lango was long LK, ACB, CGC, TJX, WMT, FIVE, and JWN. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 7 Best Tech Stocks to Buy for the Second Half of 2019 * 7 Top-Rated Biotech Stocks to Invest In Today * 4 Semiconductor Stocks to Sell Compare Brokers The post 5 Stocks to Buy for $20 or Less appeared first on InvestorPlace.

  • Why Luckin Coffee Stock Jumped 10% Today
    Motley Fool29 days ago

    Why Luckin Coffee Stock Jumped 10% Today

    Discovering that some heavy hitters like the brand makes owners of the stock smile -- but should it?

  • Barrons.comlast month

    More Investors Reveal Big Stakes in Luckin Coffee, the ‘Starbucks of China’

    The sovereign-wealth funds of Qatar and Singapore disclosed large stakes in the Chinese coffee chain. A unit of Capital Group also bought up Luckin stock.

  • Sell Nio Stock, Buy Luckin Coffee Stock
    InvestorPlacelast month

    Sell Nio Stock, Buy Luckin Coffee Stock

    Investors looking for a good Chinese growth stock should buy Luckin Coffee (NASDAQ:LK).Source: Shutterstock And anyone who has bought the shares of Chinese electric-vehicle maker Nio (NYSE:NIO) should dump their Nio stock and buy Luckin Coffee stock instead. Luckin Coffee Stock Is Everything That Nio Stock Is NotLuckin Coffee stock has all the characteristics of an excellent growth stock. Luckin is growing rapidly, has created a product that millions of people love, isn't facing tough competition, can easily grow a lot more and can quickly become profitable.InvestorPlace - Stock Market News, Stock Advice & Trading TipsLuckin's revenue jumped from $12.9 million in the first quarter of 2018 to $478.5 million in Q1 of 2019. Clearly, its products are resonating with millions of people in China. According to KeyBanc, the company "provides quality coffee at almost half the prices seen on the menus of Starbucks Corporation (NASDAQ:SBUX) and the British brand Costa Coffee." * 7 Stocks to Buy for the Coming Recession Another research firm, Needham, believes Luckin has a huge growth opportunity. The firm wrote that Luckin is "disrupting the coffee industry in China … and gaining market share in China's coffee market which is characterized by rapid growth," Investor's Business Daily reported. Needham started Luckin Coffee stock with a "buy" rating, while KeyBanc initiated it with an "overweight" rating. Importantly, Luckin Coffee looks well-positioned to become profitable, especially given its rapid top-line growth. In 2018, the company generated a gross profit of $308.5 million. Although its high total operating expenses of $2.4 billion prevented it from being in the black overall, the impact of the operating expenses -- many of which are fixed costs like paying executives and conducting R&D -- on its bottom line will decrease as revenue grows.Conversely, as InvestorPlace columnist Vince Martin pointed out in a piece published earlier this month, Nio is facing very tough competition, and its deliveries plunged nearly 50% in the first quarter versus the previous quarter. NIO itself has warned that its competition is becoming more formidable, even though, as Martin noted, its "market share is miniscule."Indeed, the company is competing against at least eight other electric-vehicle makers, including BYD (OTC:BYDDF), which obtained an investment from Warren Buffett, and BAIC, which is owned by the government of China. Additionally, foreign automakers, including Tesla (NASDAQ:TSLA), GM (NYSE:GM), Volkswagen (OTC:VLKAF), and Ford (NYSE:F), are preparing to sell electric vehicles in the Chinese market.In three of the last four quarterly results reported by Nio, the company's gross profit has been meaningfully negative, so it's nowhere near being profitable. Given that stat, along with Nio's tough competition and the fact that its revenue dropped meaningfully last quarter, I agree with Martin's warning that Nio stock price could easily hit zero. Luckin Stock Is a Much Better Buy Than NIO StockDespite the tremendous disparity between the companies' performance and outlook, Luckin Coffee stock is not that much more expensive than Nio stock. Luckin looks much more expensive on the surface because its price is over $18 per share and Nio stock price is barely above $2 per share. But Luckin Coffee stock has a market cap of $4.14 billion, while the market cap of Nio stock is $2.75 billion. The enterprise value-sales ratio of Luckin Coffee stock is a bit over three, while that of Nio stock is a bit under two. In other words, even though Luckin's business is so much better positioned than that of Nio's, Nio stock isn't much cheaper than Luckin Coffee stock. The Bottom Line on Luckin Coffee Stock and Nio StockLuckin's business is booming and the company faces very little competition -- it will soon be profitable.Nio's business is weakening, it faces intense competition, and it isn't going to be profitable anytime soon. * 7 High-Quality Cheap Stocks to Buy With $10 Luckin's outlook is very strong, while NIO has a good chance of going belly-up. And, yet, Luckin Coffee stock isn't that much more expensive than Nio stock. Clearly, investors looking for a Chinese growth name should dump Nio stock and buy Luckin Coffee stock.As of this writing, Larry Ramer did not own any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy for the Coming Recession * 10 Smart Dividend Stocks for the Rest of the Year * 5 Tech Stocks That Are Far Too Risky Right Now Compare Brokers The post Sell Nio Stock, Buy Luckin Coffee Stock appeared first on InvestorPlace.

  • Barrons.comlast month

    Luckin Coffee, the Starbucks of China, Can Beat Starbucks in China

    Shares of China’s Luckin Coffee could jump significantly over the next 12 months, according to 3 analysts who initiated coverage for the stock on Tuesday.

  • Luckin Good: Analysts See 'Lots Of Growth' For Starbucks Of China
    Investor's Business Dailylast month

    Luckin Good: Analysts See 'Lots Of Growth' For Starbucks Of China

    Luckin Coffee got bullish coverage, as analysts said the new IPO and so-called Starbucks of China should see "lots of growth." Luckin Coffee stock was down.

  • Benzingalast month

    KeyBanc Takes Bullish Stance On China's Luckin Coffee, Sees Profitability On Horizon

    Luckin Coffee Inc – ADR (NASDAQ: LK ) has a number of strategic advantages, including exposure to China’s rapidly evolving coffee culture, limited competition, low costs and better analytics than peers, ...

  • Alibaba’s Delivery Platform Provides a Big Opportunity
    InvestorPlacelast month

    Alibaba’s Delivery Platform Provides a Big Opportunity

    Alibaba's (NYSE: BABA) food delivery platform,, has shown rapid growth in the past few quarters. The recent quarterly report of its rival Meituan indicates signs of lower price wars with Meituan's quarterly loss in the recent quarter was $207 million, less than half the consensus estimate by analysts, while the growth rate was 70%. and Meituan have formed a duopoly in food delivery and other consumer services in China. Source: Shutterstock InvestorPlace - Stock Market News, Stock Advice & Trading TipsAfter the initial heavy discounting strategy, both these companies are looking to reduce their losses. This should be a significant tailwind for long term margins and Alibaba had a revenue share of 5% in the latest quarterly results of Alibaba with revenue of $785 million. This share can increase to 10%-15% by the next fiscal year due to faster growth in this segment. Improvement in margins in should increase the overall revenue growth of Alibaba. This will increase its EBITDA significantly. Investors should closely look at the future growth potential of this service. Duopoly Shows Lower CompetitionFood delivery is another segment where Alibaba and Tencent are competing. Meituan is backed by Tencent and was listed in late 2018. After the listing, Meituan saw significant stock decline, however, it has made some recovery in the last few weeks. One of the reasons for more positive sentiment towards Meituan is the lower discounts offered by the company to gain market share. * 7 Dark Horse Stocks Winning the Race in 2019 In the initial growth phase, both Meituan and relied on heavy discounting to attract restaurants and customers to their services. Both these competitors are now moving away from discounts. Massive discount led to big losses in and also hurt Alibaba stock.but an easing of that headwind has reduced the losses in Meituan. A similar trend should be shown by in the next few quarters. Alibaba has integrated with Koubei to form a separate segment called "Local Consumer Services."Fig: revenues are shown within local consumer services division. Source: Alibaba FilingsThe market share of Meituan is still higher than Meituan's market share is 63.4% according to Trustdata., meanwhile, has integrated its services within Alibaba's Taobao and Tmall apps. In the recent quarterly report, Alibaba mentioned that 30% of the customers on come through these apps. This is a big positive, and better integration of with other apps within Alibaba's ecosystem will improve the moat of these services. Future Direction for BABA StockThe delivery market is far from saturation in China. We should continue to see more services added to the delivery platforms, increasing the growth potential of and also helping build a better last-mile logistics network. is in discussion to add Luckin Coffee (NASDAQ:LK) to its delivery network. Luckin is the main rival of Starbucks in China and was valued at $4 billion in the recent IPO.Alibaba is rapidly building its grocery store format called Fresh Hippo. Recently it opened its 150th store and has plans to ramp up the store openings in many cities. The delivery network of would be a big boost to this grocery business. It should be noted that's delivery network is much more closely integrated with Alibaba's ecosystem compared to Meituan's integration. Hence, Alibaba has a number of options to monetize every additional member on has also been replicating's model in other international regions. One of the faster-growing regions for delivery services is India where Alibaba has invested in Zomato, a leading player. Last year, Ant Financial invested over $400 million in the company. In the recent annual report, Zomato mentioned a 3x jump in revenue. Zomato is competing against Swiggy in this region, which is backed by Tencent (OTCMKTS:TCEHY).Source: ZomatoWe should see a similar trend in delivery services in other regions of South Asia and Southeast Asia. This opens a greater opportunity for Alibaba. A healthy margin by in China should help in improving the future expectations from these services in other international regions. This should lead to better sentiment towards Alibaba stock as the company expands its international business. Path to IPOTencent has been quite eager to go to the IPO route for its different services. In 2018, we saw IPO of Meituan and Tencent Music, and we could see more. Alibaba has not taken this path till now. But it is likely that Alibaba will also try out this approach, as it will be able to invest in other growth segments. Meituan has a valuation of $40 billion while Tencent Music has a valuation of over $20 billion. Alibaba can take IPO option for and Youku (its digital media segment) to get a better standalone valuation for these businesses. Reuters has reported that Alibaba is looking for a secondary listing of $20 billion in Hong Kong. This option should also help in getting a better valuation for Alibaba stock. Currently, Tencent, which is listed in Hong Kong, is valued at 24 times its forward earnings. Alibaba is trading at around the same level, but Alibaba's revenue growth has exceeded Tencent for the past six quarters. In the recent quarter, Tencent reported revenue growth of only 16% compared to 39% by Alibaba after adjusting for acquired businesses. Investor TakeawayAlibaba's food delivery platform,, is seeing lower price competition. The discount wars between Meituan and have reduced considerably. This has helped Meituan post better results in the latest quarter, so should also see an improvement in margins. The recent revenue from this platform was $765 million with a 5% revenue share. That revenue share metrics should increase substantially as new services are added to the delivery network. Better margins and higher revenue share from should lift the overall margins for the company and increase the bullishness towards Alibaba stock.Alibaba is also replicating this model in other regions. This will help the company in diversifying its revenue base and also improving the growth prospects in international regions. Alibaba can use the IPO route for which should improve the valuation for this business and allow the company to divert resources to other profitable segments like cloud.As of this writing, Rohit Chhatwal did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Dark Horse Stocks Winning the Race in 2019 * 6 Chinese Stocks to Sell That Are Suffering From a Digital Ad Slowdown * 4 Technology Stocks Blasting Higher Compare Brokers The post Alibaba's Delivery Platform Provides a Big Opportunity appeared first on InvestorPlace.

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