LKNCY - Breakout Entered Advance StageLKNCY has made a powerful breakout from its accumulation zone. This breakthrough came on the back of strong quarterly earnings, positive net income, and growing revenue.
INTRODUCTION:
LKNCY is a strong rival of Starbucks in China. It is rapidly adding new stores, reaching the nationwide number of nearly 8,000. In contrast, Starbucks has 6,000 stores in China despite its decades-long presence.
BREAKOUT & ADVANCE STAGE:
When a stock enters Advance Stage (called as Stage-2), its movement gets fast particularly when it is supported by strong earnings. LKNCY stayed in Accumulation Zone (Stage-1) rangebound for almost 2 years while the company did not post positive earnings for many years. But now, it has broken the resistance of accumulation stage, and entered advance stage on the back of impressive quarterly earnings.
EARNINGS GROWTH
Luckin's post-quarter revenue is up 18% while post-quarter earning has expanded a whopping 561%. Its earning trend and footprint growth in China shows it to be a truly growth stock. It has had negative margin for the past few years which kept its price growth lurking and slow. However, its revenue growth has never slowed down because of its rapid expansion and widening customer base.
FUTURE PROSPECTS
Although not enough data is available about the future growth of LKNCY, its current growth trend reveal good prospects for the future. Its technicals are sound and financials are rapidly improving.
LKNCY
LKNCY Bearish TrendLKNCY Is in a bearish trend, despite being above the down trend line, a true bottom may be far away
In the short term although bullish action should come about as it repeats pattern in green
Price when trending along downtrends like this can continue for awhile is the main takeaway.
LKNCY Repeating MA patternIt can be seen after the MA arrives and makes a small turn towards the upside, price immediately follows
This can be observed on the latest MA (yellow)
The price is within a Rising Wedge (a bearish pattern) but this observation of the MA's give me hope for a bull breakout, as can be seen with each MA in the past