Luckin Coffee Could Stumble When IPO Lockup Expires

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About: Luckin Coffee Inc. (LK)
by: Don Dion
This article is exclusive for subscribers.
Don Dion
Long/short equity, special situations, momentum, event-driven
Summary

When the IPO lockup period for Luckin Coffee expires on November 13th, pre-IPO shareholders and company insiders will be able to sell a large blocks of currently-restricted shares.

Significant sales of currently-restricted stock could flood the secondary market when the lockup expires and cause a sharp, short-term downturn in share price.

With a more than 10% return from IPO, pre-IPO shareholders and company insiders could be looking to cash in on gains.

Aggressive, risk-tolerant investors should consider shorting shares of LK ahead of the IPO lockup expiration.

When the lockup period for Luckin Coffee (NASDAQ:LK) ends on November 13th, its pre-IPO shareholders will have the opportunity to sell large blocks of currently-restricted shares.

(Source: S-1/A)

Just 14.2% of