Luckin Coffee (NASDAQ:LK) is today’s hottest growth stock.
Investors are paying about 20 times revenue for the Chinese coffee to-go vendor. The shares are up almost 10% in just 24 hours, opening Feb. 19 near $40, a market capitalization of $10.2 billion.
When Luckin reports its fourth-quarter results, analysts expect a loss of 22 cents per share on revenue of $326 million. It’s that last number that’s attracting investors. Revenue for the September quarter was barely $200 million, and for the June quarter just over $100 million.
Investors are betting that the growth rate can scale, and that profits are just around the corner. Are they right?