NEW YORK (BLOOMBERG) – Luckin Coffee Inc’s initial public offering (IPO) was met with great fanfare – and then it wasn’t.

Shares of China’s answer to Starbucks soared as much as 53 per cent to US$25.96 on May 17, their first day of trading in the US. Since then, the stock has plunged 39 per cent from that peak, even with a rally in the final half hour of trading on Thursday that gave Luckin a 7.1 per cent gain for the day.

Since its inception in June 2017, Luckin has quickly expanded into 2,370 stores in 28 cities, with backing from investors including Singapore sovereign wealth fund GIC and China International Capital Corp.

But investors have questioned the company’s sacrifice of profits in favor of a cash-burn strategy at the same time as the rocky China-US trade relationship weighs on global markets. The Chinese startup is seeking to overtake Starbucks Corp, opening more stores in two years than the industry giant has in 20 years.

Luckin’s 7.1 per cent decline from its IPO price of US$17 per share – to US$15.79 as of Thursday’s close – isn’t as bad as the performance from ride-hailing company Lyft Inc, which is down 20 per cent from its offering price of US$72 in late March. But it’s a frustration for market watchers such as Hedgeye Risk Management analyst Howard Penney, who last week projected 50 per cent upside for the stock.