coffee is technically China is still a undeveloped country. But the market is growing quickly. Alongside the US giant Starbucks and the local competitor has called on the Plan. One of them is “Luckin Coffee”. The chain has 2500 branches in the country. But don’t drink there. Instead, customers can order their favourite coffee via the App. It is then delivered fresh – brewed at home or in the office for a few Cents more.
started As a “Luckin Coffee” with this concept, almost exactly a year ago on the New York stock exchange, made the headlines. From the “war of China’s coffee drinkers,” was the speech, although the market is in the realm of mid-large enough to accommodate multiple chains.
share shoots up to 300 percent
But the big ambitions with impressive growth figures: Because the Chinese needed with your concept of less load, local and Personal, were the costs lower than other chains. This enabled them to established a rapid Expansion in 2017, it brought Luckin Coffee at the IPO on a valuation of $ 3.5 billion.
at the beginning of January then the next milestone: At a press conference, the founder Jenny Qian Zhiya, and Charles Zhengyao Lu announced that she wanted to have 4509 branches and now in the retail venture. The share price shot to a record high of 50,02 Dollar – 294 per cent over the issue.
a Trader on Reddit all his savings, loses
It was around this time, as an anonymous Americans invested in the stock and not too tight. For 235.204,83 dollars, he bought a share of Luckin a Coffee, according to their own statements, his entire savings.
Five months later, he presented a Screenshot on the platform of Reddit. It is seen that he has lost 95,25 per cent of his savings. As a share of Luckin a Coffee costs today, not 50, but only about 4 dollars. “I’m totally broke,” he writes.
it has come to this is because Luckin Coffee is not a worthy Starbucks competitor, but best is if a big hoax. The hedge Fund Muddy Waters Research has revealed that by the end of January with a 89-page report on Twitter. Based on anonymous sources, and evidenced from the analysis of 11,200 hours of video material, that the coffee chain sales have shown up to 88 percent high.
Luckin Coffee fought back, first with denials, however, but had to admit at the beginning of April after an internal audit report that the Chief Operating Officer have corrected the profit for the year to $ 310 million upwards. Then, as China’s regulatory authorities announced an investigation, slipped the stock to the Ground. On the New York Nasdaq, even a one-month trade stop, could not stop the drop in value. Luckin Coffee will probably be taken over soon by the big Bank Goldman Sachs, because the founders of debts can no longer operate.
What are the Lessons from the debacle
For the Reddit traders, whose user name is too vulgar to mention it here, this is not much of a help anymore. Pity he reaps in the Forum “Wallstreetbets” however, hardly. Here young Trader, who like to brag too risky Zockereien especially. However, you know the basic rules of the share investment.
“Why are you putting all your savings in Chinese coffee?” ask about a disbelief. “Did you not set a Stop-limit, if you sold $ 240,000 in a company to invest, the coffee?” asks another. With a suitable Limit his Broker had sold the shares at a certain rate automatically in order to limit his losses. “Oh, man, whenever I feel bad about my own Trades, cheers me up in this Forum,” wrote a third commenter.
The three Lessons for the Amateur investor from the Luckin-Coffee-Disaster are simple: firstly, you should do not ever put all your savings in one share, but at least 10 to 15 stocks from various countries and industries to distribute. Secondly, you should stop limit to prevent too high losses. And thirdly, you should not invest in highly-hyped company, but in those whose business model you understand and they know best.
These tips will not help Reddit-Trader now. His commentators also react more with gallows humor: “You’ve still got $ 12,000 left on your account. Come back tomorrow and finish the Job!“
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