Does Luckin Coffee’s 49% Surge in 2025 Reflect Its True Value After Rapid Expansion?

• Curious whether Luckin Coffee’s share price truly stacks up to its rapid growth story? You’re not alone, and the debate about its real value is hotter than ever.
• Recently, Luckin Coffee’s stock has risen 4.0% in the past month, and the year-to-date gain stands at an eye-catching 49.0%. This is in addition to an incredible 693.3% increase over the past five years.
• Much of this momentum followed headlines about the company’s record store openings and its aggressive push into new product categories, fueling speculation about more market share gains. These updates have investors and analysts alike rethinking how much upside or risk might remain in the current price.
• Despite all the excitement, Luckin Coffee earns a 2 out of 6 on our valuation checks, showing there’s a lot more to uncover about whether the stock is truly undervalued. Let’s dig into what those numbers mean and, later on, why there could be an even smarter way to judge value.

Luckin Coffee scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Luckin Coffee Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates what a company is truly worth by forecasting its future cash flows and discounting them back to today’s value. This approach provides an intrinsic value based on long-term growth, rather than short-term price swings.

For Luckin Coffee, the current free cash flow stands at CN¥3.6 billion. Analyst estimates project this will grow each year, with projections (including both analyst input and further extrapolations) leading to approximately CN¥6.9 billion in annual free cash flow by 2035. The company’s ability to consistently grow cash flow is a positive sign, but it is important to remember that projections more than five years out are much less certain.

After modeling these future cash flows and discounting them to today, the estimated intrinsic value for Luckin Coffee comes out to $36.37 per share. Compared to the current share price, this implies Luckin Coffee is about 10.3% overvalued right now according to the DCF model.

The bottom line, at today's price, is that investors are likely paying a premium for Luckin's future potential rather than present fundamentals.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Luckin Coffee may be overvalued by 10.3%. Discover 832 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Luckin Coffee.

Approach 2: Luckin Coffee Price vs Earnings

The Price-to-Earnings (PE) ratio is often the go-to valuation metric for profitable companies like Luckin Coffee, as it shows how much investors are willing to pay for each dollar of profit. A higher PE usually reflects higher growth expectations or lower risk, while a lower PE can suggest either undervaluation or higher perceived risk.

Luckin Coffee currently trades on a PE of 23.3x. This is right on par with the Hospitality industry average of 23.3x, but well below the average for its direct peers, which comes in at a much higher 56.9x. At first glance, this might suggest that Luckin is valued fairly relative to the broader sector but is cheaper than some competitors.

However, Simply Wall St has developed a “Fair Ratio,” a custom calculation for each company that weighs factors like growth rate, risk profile, profit margin, industry, and market cap to offer a tailored benchmark. Unlike simple peer or industry comparisons, the Fair Ratio provides a more complete view of whether a company’s PE ratio is justified by its unique fundamentals. For Luckin, the Fair Ratio stands at 29.5x. Since this is only modestly above the current PE, the stock appears to be trading very close to what would be considered fair value by this robust measure.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1410 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Luckin Coffee Narrative

Earlier, we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is more than just a number or forecast; it is the investor’s story about where a company like Luckin Coffee is headed, outlining what you believe about its future growth, margins, and ultimately its fair value. Narratives help you connect your perspective, why you think the business will succeed or struggle, to the actual numbers driving the stock’s valuation, making your personal investment thesis both visible and actionable.

On Simply Wall St's platform, Narratives are featured on the Community page, where millions of investors share views, assumptions, and fair value estimates that update automatically as new news or earnings arrive. By crafting or reviewing Narratives, you can easily see how your view stacks up against others, and use that insight to decide whether to buy, hold, or sell, especially as the gap between Fair Value and the current Price becomes clear. For example, one optimistic Narrative for Luckin Coffee forecasts sustained high growth and margin gains, suggesting a fair value above $46, while a more cautious view, focused on escalating competition and shrinking margins, sets fair value closer to $37. This transparent approach lets you invest with clarity, confidence, and the flexibility to update your reasoning as the story evolves.

Do you think there's more to the story for Luckin Coffee? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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