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December 19, 2025Advances in Economics Management and Political SciencesOpen Access

Fraud Company Reevaluating: A Discounted Cash Flow Model of Luckin Coffee

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Authors

JWJinbo Wang

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Overview

Case study reveals how adjusted valuation models reflect trust impairments in Luckin Coffee's financial evaluations.

Key Points

  • To examine the limitations of traditional valuation models in light of trust issues following a scandal involving Luckin Coffee.
  • Utilized a case study of Luckin Coffee to explore valuation model breakdowns after trust issues were disclosed
  • Employed a Discounted Cash Flow model and a relative valuation model based on restated financial statements from 2020
  • Adjusted for factors such as governance risk premium related to trust penalties in the market
  • Adjusted valuation models aligned with market price reactions to trust impairments at Luckin Coffee
  • Findings highlighted the need for financial professionals to consider trust-related adjustments in valuations
  • Research demonstrated the relevance of using case studies for understanding financial model revisions

Cite This Study

Jinbo Wang (2025) studied this question.

synapsesocial.com/papers/69449a892f0218eca9508433https://doi.org/10.54254/2754-1169/2026.ld30600
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