Shares in Luckin Coffee tumbled in the US overnight after the Chinese coffee chain upstart reported widening losses in the second quarter despite beating revenue expectations.

Why it’s important: Widely considered as a challenger to Starbucks’ crown in China, Luckin Coffee burst onto the scene in 2018 and soon became the country’s number two chain despite burning through cash to fuel its rapid expansion.

The Xiamen-based firm raised $561 million in a US IPO in April this year.

Details: Luckin Coffee shares closed 16.7% lower in US trading overnight after it reported that net losses doubled to RMB681.3 million ($99.2 million) in the quarter.

Revenue rose sevenfold to RMB 909.1 million ($132.4 million) in Q2, beating Refinitv’s analyst estimate of $130.2 million.

The firm’s per-share loss was 48 cents, missing Refinitiv’s estimate of 43 cents and Zacks Investment Research’s 44 cents.

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