Busting the Luckin Coffee Fraud
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- เผยแพร่เมื่อ 11 ก.ย. 2020
- I want to talk about a very special investigation - the one that broke the Luckin Coffee financial fraud, crashed its high-flying stock, and added fuel to the Sino-American trade war. The thing about the Luckin Coffee investigation that impressed me was the sheer depth of detective work and data brought to the case by an outside party. In this video I go through it.
Stay tuned after the video for some off the cuff audio commentary when writing the video.
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Great video. Well deserved praise to the people who compiled this extensive report . It reminds of the 1MDB scandal and how a single journalist investigating illegal logging in Sarawak uncovered the the biggest fraud in Malaysian history even bringing down a Prime Minister. The point is, asking questions and open journalism are essential to a more transparent and fairer system.
You can definitely tell there's been a big improvement in scripting and video quality since a few years ago. Keep up the good work man!!
I also find stupid for a coffee company to be focused on caféine and not on taste, cakes, etc... . Energy drinks full of caffeine were born in Asia, and they conquered the world. Redbull story is kind of fascinating.
I admired the work involved in the report, and appreciated the extra insight afterwards.
TH-cam has started recomending me some of your olders stuff, fun to see how far you have come since this was made!
Thank you very much for covering this, I find it fascinating, I love seeing how you cover stuff that you enjoy and share in the experience!
I listened to the whole thing. I appreciate your analysis and engaging delivery.
Hi! You should do an update of Luckin Coffee. They have recovered and surpassed Starbucks in number of stores in China and now they are profitable.
Damn you are on fire. So many videos in a short period.
Just bought into Luckin coffee shares @ $7.20 after bankruptcy announced.
Hope you still have them. It's 31 now. Target given by Barron is $268. My target is $1000. This business is proven working and past the 3 years COVID lockdown and delisting.
Since the fraud was obviously intentional, why are the ceo and coo not in prison? It’s the only way to put fear in the hearts of the corrupt!
I was just in Shenzhen and bought my first coffee at Luckin. It's surprising to me that Luckin has largely bounced back from this fiasco. I found the stores I went into (all small as you mention) very clean and the product good. The ordering process as you mention is all via an app. They might yet still become a huge success.
They had a huge turn around, got some good management and are now at the top.
they doing better than starbuck so i think they are doing great. Very good new tastes from R&D
Super interesting!
This is exactly the reason I refused to invest in Chinese company stocks. I became aware of book cooking 20 years ago and that is way of life for many over there.
Everything is cooked 🤣 The report is cooked too, LOL. Did you ever wonder why Subway's toaster is so quick? Because they call a microwave oven toaster.
I worked in both Chinese and silicon value tech companies before I became an investor. You have no idea how low the productivity of silicon valley companies are.
I like and enjoy your analysis
Is there a date to re-list ? What exactly is January 15th?
I'm a Luckin Coffee member, as a foreigner living in Shenzhen/Hong Kong and I can say for sure that I never paid more than 12RMB per coffee and most of the times I have discounts that make the coffee close to 10RMB or less. Heck I think that I only even once bought any food there because it is way more expensive that going to any bakery shop as Bread Talk or 85 (yes the English names are sure a bit strange, more trying to be trendy by using English words, kinda like Luckin Coffee).
It's true that comparing with brands as Starbucks and their own shops, very few Luckin are big enough to have a place to seat inside - from the ones I frequent only 2 have a dedicated place inside, 2 are outside tables with umbrellas and one a shared place with a office building entrance, that the security of the building don't allow sitting for customers of the coffee shop but it's most of the time overlooked while the rest are no bigger than a car parking spot.
From those only the one with seats inside could be considered the size of a small Starbucks in China if, but in a area where you may have 1 Starbucks you may have 3 or more Luckin in a 1km radius - Yantian District you have 2 plus 2 Starbucks in the same area, one of those in a Shopping Mall.
This is experience from Luckin's found in Yantian, Lou Hu and Futian districts. 90% are the small size, so only the kitchen to make the drink plus the counter to pick up, with no seating available.
So it doesn't suprise me that the things were being inflated because as I most Chinese are promotion savvy and very rarely the will buy anything at full price, including coffee. Starbucks although more know is more expensive, and there is even more rare for the common Chinese to go, what I see on them when I go is mostly executives/suit office workers and well financially Chinese people, with a big sprinkle of younger 20 to 25 with brand clothing - I'm not categorising or fitting people in buckets, just from my own experience when I frequent such shops.
Both Starbucks and Luckin coffee don't make money from coffee. Their profits come from those drinks in pink colors. because lk stores are smaller, their cost is low
Expansion and Revenue growth at the same time don't make sense. Expansion means increase in operating cost. I have seen many companies went bankrupt because they expand too fast. These companies borrow money from the bank and accumulated debt for the expansion. If you see rapid expansion and revenue growth in the same report. There is something fishy.
It was so massively over-hyped...glad to see they were held accountable.
I think all your stuff is really interesting. How can I get in touch with you?
Good coverage.
Luckin coffee situation nowadays. They doing good!
th-cam.com/video/2S3H0DKntNw/w-d-xo.htmlsi=Vw4suG2qIMWYgsd_
The scale and tedium of gathering the data was neat but the analysis of the data is just basic arithmetic and statistics.
Bro. You're smart af. Good material.
Thanks!
Don't you think that Starbuck which has the manpower and the financial, and a strong motivation could have helped in killing luckinin coffee? Starbuck was almost everywhere in Shanghaie when I visited 2010.
I wouldn’t rule it out for sure
Nice vids mate, keep it up.
The coffee situation in china is pretty interesting. I've seen chinese say they don't like coffee, infact i've seen a guy in shanghai proclaim 'we don't like your western coffee, we like dou jiang!'
I've seen photos of coffee shops in shanghai pre CCP times, so he doesn't even know his own cities history.
I think the CCPs raze of history and anti western propaganda has made chinese turn their nose up at outside food and culture and they are worse off for it.
This is beautiful
So Lurkin is now doing better than Starbucks, care to do a indepth?
he is a mainland china hater
Starbucks generated the report it is my guess lol. I hear Luckin is making a comeback though.
I've heard alot of Chinese people said China don't drink coffee and you mention that its not that popular as people believed. But studies and many articles has shown otherwise. Do you think Luckin will make a profit in China with low coffee demand?
Hm. I think they need to get away from the couponing and discount mindset. The challenge is that they’re not alone in the market. Starbucks is doing quite well already and they have many years’ head start.
Impressive
This story is amazing! My question is why did they put so much in to finding out the fraud in the first place? That took a lot of time, money & effort. It’s like Someone had a personal vendetta with Luckin Coffee & wanted to see them fall. & it just so happens that they caught them cooking the books. I like Luckin Coffee business model & hopefully they can turn things around..
Starbucks paid for it 😂
@@deepsudeep I believe they did. lol.. Who else would be that motivated to do that much work to find out if they were cooking the books or not..
At the end of the video, I explain that the study was funded by a China-focused hedge fund in Shanghai. Did you finish the video?
@@Asianometry Yes, but I ask again, why would a hedge fund be so invested to find out if Luckin Coffee was committing fraud? Who was the source at the WSJ that can confirm that story or is that even true? Did the hedge fund try to short the stock and lost big due to Luckin Coffee gains?? Then got upset enough to invest MORE money into seeing why? Why would they care so much?? Then when the fraud news came out nobody wanted to take credit for exposing the fraud.. Sounds super fishy to me. There had to be an silent partner involved that doesn't want to be found out... I personally think only an competitor of Luckin Coffee would do such a thing.. ex. Starbucks
I think it’s pretty clear that the hedge fund was incentivized to do this analysis because it could stand to make millions and perhaps hundreds of millions on a well timed short. It is the clearest answer to me.
And I don’t think there’s anything fishy about not wanting their name plastered on the news as being an investigatory fund. Such people can get into trouble in China.
Can you crack the Starbucks shell?
Starbucks paid for the investigation for sure.
Epilogue... 3 years later... "back with a vengeance" : th-cam.com/video/2S3H0DKntNw/w-d-xo.html
This makes me want some coffee rn...
the coffee is shite anyway
noice
Only Starbucks could've afforded this huge and expensive data collection effort.
The entire investigation cost just $2-3 million. A $2.5 billion hedge fund could have definitely afforded it.
relgardless of all this, Luckin coffee got itself a pretty good logo.