Starbucks Said To Have Landed $5B Valuation For China Business Amid Intense Battle With Luckin Coffee

Starbucks Corp. shares fell for a second consecutive session on Thursday but edged up after hours, with retail traders remaining largely optimistic about the coffee chain's turnaround under new CEO Brian Niccol.

There could be more upside heading into Friday, as a Reuters report, citing two people familiar with the matter, stated that Starbucks' China operations have attracted multiple bidders, valuing the business at up to $5 billion. A deal would help the company monetize a stake in its second-largest market, where it faces sluggish economic growth and fierce competition from local brands.

Bloomberg previously reported that Starbucks had shortlisted about a dozen firms, including private equity giants Carlyle and KKR, to bid for a potential investment or partnership in China. Starbucks has not publicly commented on the reports.

Despite being the U.S. chain's key growth market, China has seen Starbucks lose ground to rivals like Luckin Coffee (LKNCY) and Cotti Coffee, both of which have grown rapidly with cheaper offerings and frequent product launches.

On Thursday, Macquarie analyst Linda Huang initiated coverage of Luckin with an 'Outperform' rating and a $52 price target, citing China's coffee boom as per-capita consumption rises. 

Luckin has already surpassed Starbucks as China's largest coffee chain, operating 26,000 stores as of mid-2025, and is expected to post annual net profit growth of at least 20%, according to Huang.

Valuations reflect the divergence: Starbucks trades at a forward P/E of 34.8x compared with Luckin's 17x. U.S.-listed shares of Luckin have gained more than 44% this year, while Starbucks shares have slipped by over 4.5%, according to Koyfin.

On Stocktwits, sentiment has been contrarian: Starbucks retains a largely ‘bullish’ retail following, while investors remain mostly ‘bearish’ on Luckin.

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