Luckin Coffee wanted to become the Starbucks of China. The company was incorporated in 2017 and opened their first stores in 2018. Within 2 years of incorporation, they went for IPO in 2019. And by Jan 2020, it manages around 4,507 (Jan. 2020) stores and has exceeded the number of Starbucks stores in China.

Sounds impressive until the cover up was exposed and the share price tanked by 81% in one day.

Luckin ran out of luck and I was lucky not to invest in Luckin.

Some principles helped me. First, I don’t buy IPOs because insiders have very big advantages over retail investors. We don’t know what we don’t know and they tend to IPO during bull markets to get higher valuations. Second, I take short sellers’ reports very seriously.

I came across an anonymous research damning Luckin Coffee in early 2020. Muddy Waters published it and took