Wake Up & Smell The Coffee Stocks of Starbucks & Luckin Coffee Before Christmas 2020

Summary

  • Luckin Coffee stocks shot up nearly 96 per cent on Thursday, December 17.
  • Stocks of Starbucks Corporation grew nearly 34 per cent in the last six months and over 17 per cent this year.
  • The US-based coffee chain giant reported its latest earnings report in December, following which its shares surged over five per cent so far this month.

 

It’s starting to feel a lot like Christmas, with the holiday being less than a week away. With the smell of cakes and warm drinks filling the air around us, how about we explore some coffee stocks today, such as Luckin Coffee Inc (OTCMKTS: LKNCY, LKNCY:US) and Starbucks Corporation (NASDAQ: SBUX, SBUX:US)?

Coffee businesses around the world, like so many other enterprises, saw their performances dwindle amid the coronavirus pandemic due to operational and production hiccups. Due to the lockdown restrictions, coffee stores too had to remain shut for months, garnering losses. But since the economy began reopening, the businesses have been improving, which reflected on the performances of the coffee stocks.

The S&P GSCI Coffee index, a benchmark for the coffee commodity market’s investment performance, is up over 14 per cent quarter-to-date but down by about two per cent this year.

Let’s take a closer look at the coffee stocks of Luckin Coffee and Starbucks Corporation.

 

Luckin Coffee Inc (OTCMKTS: LKNCY)


Often referred to as the 'Starbucks of China', Luckin Coffee Inc is a Chinese company that operates a chain of coffee stores.

Its stocks shot up nearly 96 per cent on Thursday, December 17, after Luckin Coffee reportedly agreed to pay about US$ 180 million to settle accounting fraud charges.

Luckin Coffee faced much heat this year following reports claiming that the Chinese coffee company has fabricated sales in 2019. After months of investigation, the Securities and Exchange Commission (SEC) in the United States announced penalty charges on Thursday.

Following the fallout, Luckin Coffee stocks were delisted from the Nasdaq in July and saw their value drop by over 80 per cent this year.

However, Luckin Coffee shares posted a growth of over 89 per cent in the last six months and about 194 per cent in the last three months.

YTD chart of Luckin Coffee’s stock performance (Source: Refinitiv/Thomson Reuters)

 

Starbucks Corporation (NASDAQ: SBUX)


Stocks of Starbucks Corporation grew nearly 34 per cent in the last six months and over 17 per cent this year. The stocks currently have a 10-day average share trading volume of over 7.1 million.

The coffee chain giant reported its latest earnings report in December, following which its shares surged over five per cent so far this month.

Starbucks Corporation reported consolidated net revenues of US$ 6.2 billion in the fourth quarter of fiscal 2020, down eight per cent YoY. The company also recorded a nine per cent drop in its global comparable store sales in the latest quarter, caused mostly due to the COVID-related challenges.

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