Luckin Coffee's Fraudulent Rise and Fall Will Help Starbucks in China
Luckin Coffee's (NASDAQ: LK) rise and fall has captivated investors. In the span of 18 months, it went from a start-up with an interesting digital-focused coffee takeout and delivery business to China's largest coffee chain by store count. Its rapid growth, fueled by margin-sapping promotions, helped bring coffee to the masses in China.
This breakneck growth caused some investors to worry that Luckin Coffee would undermine Starbucks' (NASDAQ: SBUX) position in China. Yet this growth wasn't entirely genuine. Several Luckin employees -- including senior executives -- conspired to fake hundreds of millions of dollars in sales last year. That makes Luckin look far less like a threat to Starbucks in China. In fact, it looks more like a subsidized customer acquisition pipeline.
Image source: Starbucks.
Source Fool.com
