Luckin Coffee (LKNCY) provides a technology-driven retail network to serve coffee and other products to consumers. The company reported 33.3% top-line growth for Fiscal Year 2020.
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Let’s have a look at Luckin’s recent fiscal 2020 financials as well as what has changed in its key risk factors that investors should know.
In fiscal 2020, driven chiefly by higher average product selling prices, Luckin’s net revenue jumped 33.3% year-over-year to $618.1 million. The cumulative number of transacting customers of the company stood at 64.9 million as of December 31, 2020, as compared to 40.6 million as of December 31, 2019.
Operating expenses of the company were $1 billion, declining as a percentage of net revenue to 164.1%, versus 206.2% a year ago. (See Luckin Coffee stock charts on TipRanks)
Shares are up 458.8% over the past 12 months.
Risk Factors
According to the new Tipranks Risk Factors tool, Luckin’s main risk category is Finance & Corporate, accounting for 33% of the total 101 risks identified. Since December, the company has added three key risk factors.
Under the Finance & Corporate risk category, Luckin noted that trading in its ADRs may be prohibited under the Holding Foreign Companies Accountable Act, if the Public Company Accounting Oversight Board (PCAOB) is unable to inspect Luckin’s auditor.
The next two risk factors are under the Legal & Regulatory risk category. The company noted that approval from the CSRC or other PRC government authorities may be needed under PRC law, in connection with Luckin’s offshore securities offering. If such approval is required, then Luckin cannot predict if or for how long it will be able to obtain such approval.
Third, Luckin highlighted that its current corporate structure, business, and financial condition may suffer if its VIE structure gets deemed as a method of foreign investment under any present or future PRC laws and regulations, and if any operations of any of its subsidiaries will get restricted or prohibited from foreign investment.
Compared to a sector average Legal & Regulatory risk factor of 17%, Luckin Coffee’s is at 29%.
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