Luck running out for Luckin as share prices fall

Shares in Luckin Coffee, Starbuck's Chinese rival, fell below their initial public offering price on Wednesday, just days after its debut on the Nasdaq, triggering concerns over its profitability and long-term growth.

Luckin Coffee shares closed at $14.75 on Wednesday, much lower than its IPO price of $17 per share. It has dropped by 40 percent from its peak listing price, when shares soared by 50 percent to $25.

The 22-month-old coffee chain has 2,370 stores in 18 cities across China, mostly pickup stations and charted big plans to overtake US-based Starbucks in the country. However, its business model, which relies largely on promotions and discounts, is yet to make a profit. The company sold 90 million cups of coffee in 2018, but every cup of coffee was sold at a loss.