Luckin Coffee Gets $1B Investment from Abu Dhabi Sovereign Fund, Stores Top 36,000

Author: Yuan He Data Support: Goguda Data (www.gogudata.com)

The company that nearly died—Luckin Coffee—is back.

Recently, Abu Dhabi sovereign wealth fund Mubadala Investment Company announced a strategic minority investment of approximately $1 billion in Luckin Coffee, in partnership with Centurium Capital, Luckin's controlling shareholder.

Mubadala, which manages roughly $385 billion in assets, has previously invested in SHEIN and acquired UCB's core business in China. Now, it is betting on coffee.

This is the same Luckin that was shorted by Muddy Waters, admitted to $2.2 billion in fabricated revenue, and was delisted from Nasdaq in disgrace.

Six years ago, Luckin was the target of widespread condemnation across capital markets.

Today, it operates 36,000 stores, serves over 113 million monthly transacting customers, generates nearly 50 billion yuan in annual revenue, and has attracted investment from a Middle Eastern sovereign fund.

Its stock price has climbed from a low of $1.54 on the OTC market to over $30—a gain of more than 20x.

How did Luckin go from a pariah to a capital markets darling?

01. Rebirth from the Ashes

Let's rewind to 2020.

That year, Luckin self-reported that it had inflated revenue by approximately 2.2 billion yuan in 2019. Its stock price collapsed by 80% overnight, and it was subsequently delisted from Nasdaq, moving to the OTC market.

Founders Qian Zhiya and Lu Zhengyao were ousted, and Guo Jinyi stepped in as Chairman and CEO.

At the time, few believed Luckin could recover.

Fines, lawsuits, and debt restructuring piled up, suffocating a company that was only three years old.

But Luckin survived.

In 2021, the Coconut Latte was launched, selling over 70 million cups in a single year, pulling Luckin back from the brink.

Then came the Coconut Cloud Latte and the Moutai Latte, one after another. Luckin won back consumers with an almost frenetic pace of product innovation.

In February 2022, Luckin reached a $180 million settlement with the U.S. Securities and Exchange Commission and completed its bankruptcy restructuring.

By October 2023, it had repaid all its debts ahead of schedule.

In 2024, it became one of the first Chinese concept stocks to pass a PCAOB on-site audit.

By 2025, Luckin delivered a stunning performance:

• Total net revenue: 492.88 billion yuan, up 43% year-over-year
• Net profit: 3.6 billion yuan, up 21.8% year-over-year
• Beverages sold: 4.1 billion cups—equivalent to nearly 3 cups per person in China
• GAAP operating profit: 5.073 billion yuan, with an operating margin of 10.3%

As of June 30, 2026, Luckin's global store count reached 36,310, with a net increase of over 5,000 in the first half of the year alone.

For comparison, Starbucks—after more than two decades in China—has only about 8,000 stores. Luckin has surpassed that by more than 4x in under ten years.

Moreover, Starbucks operates roughly 41,000 stores globally. If Luckin maintains its current pace, it could soon match or even overtake the global coffee giant that has been around for over half a century.

But the story is not without its challenges.

The side effects of rapid expansion are already visible.

In Q2 2026, Luckin's same-store sales for self-operated stores fell 5.3% year-over-year, following a 0.1% decline in the previous quarter.

In other words, new stores are cannibalizing traffic from existing ones. Every new store opening means fewer sales for nearby older locations.

Profitability is also under pressure.

In Q4 2025, Luckin's net profit fell 39% year-over-year to 518 million yuan, largely due to a 94.5% surge in delivery costs.

At the time, the food delivery war was raging. Consumers got used to ordering coffee from home, but the fulfillment cost for each delivery order ate into margins.

For the full year 2025, Luckin's delivery expenses reached 6.879 billion yuan, up 143.8% year-over-year.

CEO Guo Jinyi acknowledged the issue, noting that delivery costs as a percentage of revenue were too high and unit economics were suboptimal.

However, as the delivery war began to subside, Luckin's Q2 2026 delivery costs fell 3.1% year-over-year to 1.618 billion yuan—the first year-over-year decline since the delivery war began. The cost ratio is gradually returning to normal.

But the improvement in delivery costs masks a more fundamental problem: the increasingly brutal competition Luckin now faces.

02. The Coffee and Tea Battle Royale

Luckin's story becomes even more interesting when viewed in the broader context of the coffee and tea beverage industry.

In the first half of 2026, six listed tea beverage companies in China reported combined revenue of approximately 367.8 billion yuan, up just 9% year-over-year. Net profit attributable to shareholders fell about 2% year-over-year.

Compared to the 20%+ growth rates of previous years, the industry has clearly slowed down.

In 2025, China's new-style tea beverage market grew 5.7% year-over-year, while the coffee market grew 9.6% —both ending years of double-digit growth.

As more brands achieve their "10,000-store" goals and new entrants continue to nibble away at market share, major tea brands have collectively slowed their expansion.

But what happens when growth slows?

The answer: cross-industry expansion.

The line between milk tea and coffee is blurring.

Tea brands are entering the coffee space, and coffee brands are selling tea. Two once-distinct industries are now fully intertwined.

Guming is the most aggressive example.

The tea company, with a market cap of over 45 billion yuan, announced a 400 million yuan investment to expand its coffee category, aiming to increase coffee's revenue share from 10-15% to 20-25% —nearly doubling it.

As of June 2026, approximately 13,500 of Guming's stores were equipped with coffee machines, covering over 90% of its locations.

It was the morning coffee revenue that sustained Guming's growth in the first half of the year.

ChaPanda, Auntea Jenny, and Mixue have also followed suit.

Mixue has installed fresh-brew coffee machines in about 6,000 of its stores, while Auntea Jenny has upgraded coffee machines in over 9,000 locations.

Mixue's sub-brand, Lucky Cup, has already surpassed 10,000 stores, using the same low-price, high-density, supply-chain-driven strategy as its parent.

On the coffee side, Luckin's biggest rival, Cotti Coffee, has not been idle.

Cotti now operates approximately 16,000 stores across 358 cities—the widest coverage of any coffee brand in China.

However, in the first half of 2026, Cotti closed over 600 stores in a 90-day period, and many franchisees posted transfer notices on social media.

Perhaps more telling is the shift in the price war.

In early 2026, Cotti announced it would end its 9.9 yuan unlimited promotion, retaining low prices on only 3-7 products while restoring regular pricing on others. Some core items saw price increases of 30-60%.

The "9.9 yuan war" that raged from 2023 to 2026 is finally receding.

But what remains is an even more brutal battle for market share.

Luckin's competitors have not diminished—they have multiplied.

How will Luckin survive this fight?

03. Expensive or Cheap?

From a capital markets perspective, Luckin's valuation has always been a point of contention.

Currently, Luckin trades at a P/E ratio of approximately 19x, far below Starbucks' 58x but above Mixue Group's 11x.

If benchmarked against Starbucks, a global brand with international influence, 19x looks cheap. But if valued simply as a restaurant company, 19x is not low.

This ambiguity reflects a fundamental question: Does the market believe Luckin has the potential to become a global brand?

Over the past year, Luckin's stock price has largely stagnated. This may reflect waning interest in its growth story.

That context helps explain why Mubadala invested $1 billion in Luckin after all these years.

One easily overlooked detail: this transaction was not a typical equity raise. It was a secondary share sale.

Limited partners in two older Centurium Capital funds exited, with Mubadala stepping in as a new investor. The funds did not flow into Luckin's corporate accounts.

Currently, Luckin has 10.9 billion yuan in cash and short-term deposits, with a net cash inflow of 2.63 billion yuan in Q2. It does not need the money.

So what is the money for?

Market speculation points to M&A.

Earlier this year, Centurium Capital acquired premium coffee brand Blue Bottle Coffee from Nestlé for $400 million. Luckin and Centurium also previously jointly bid for Costa Coffee.

If Luckin wants to tell a new growth story—such as entering the premium coffee market through acquisitions or accelerating international expansion via overseas M&A—this $1 billion provides ample ammunition.

Currently, Luckin has only 223 overseas stores, representing 0.6% of its total. The international opportunity is enormous.

Another possible use: facilitating a return to a U.S. main board listing.

In November 2025, Guo Jinyi publicly stated that Luckin was actively pursuing a re-listing on a U.S. main board, though the company later said there was no set timeline. The signal, however, was clear.

Mubadala's strategic investment provides Luckin with international capital market credibility.

If it returns to a main board, liquidity and valuation typically improve. The OTC market sees only a few million dollars in daily trading volume, most U.S. funds and ETFs cannot trade, and there are no options or margin trading mechanisms.

Institutions generally expect that a main board re-listing could lift Luckin's reasonable P/E to 18-22x.

04. Conclusion

From its first store in Beijing's Galaxy SOHO to a coffee empire spanning 36,000 stores worldwide, Luckin's story over the past decade is more dramatic than most novels.

But the coffee industry has never lacked drama.

Starbucks took 50 years to teach Chinese consumers to drink coffee. Luckin took less than 10 years to turn coffee into a 9.9 yuan daily staple.

In the next decade, tea and coffee may fully merge. The demographics of tea drinkers and coffee drinkers are already overlapping. Can Luckin maintain its position?

For Luckin, what matters now is not the past, or even the present. It is whether it can continue to rewrite the rules of the industry in the next ten years.

As for Luckin's final chapter, only time will tell.

(End of article)