John Zolidis

Meanwhile, equity analysts are already concerned with Luckin’s valuation. John Zolidis is one of them. “We had a chance to go through the company’s F-1 filing (equivalent of an S-1), says Zolidis. “If we are doing the math right, the company is seeking a $3.5-$3.9B valuation with last year’s revenues of only $125M and a full-year EBIT loss of $238M,” he said. “We get that LK has super-fast unit growth and it using promos to drive trial, get downloads for its app, and sign-ups for the loyalty program.”

That would certainly help the company burn a great deal of cash, but it won’t make it profitable. “Our initial conclusion is that it will difficult for this company to turn the current operating model into a profitable and cash generating business,” adds Zolidis.

“Everyone that follows Amazon is jumping up and down about how exciting this is,” Zolidis told Business Insider. “But this was expected.”

Same-day shipping, not one-day shipping, is the “real battleground” for retailers, and Walmart and Target are well positioned to win that war, he said.

In conversations last October with Walmart CEO Doug McMillon, McMillon characterized same-day shipping as the “final frontier” that “everyone is racing to develop,” Zolidis said. Walmart did not immediately respond to a request for comment on this story.

ome analysts said large retailers won’t have much difficulty competing. In a research note on Friday, John Zolidis, president of Quo Vadis Capital, said it would be a mistake for investors to sell shares of large retailers such as Target and Walmart on Amazon’s announcement.
“They have anticipated this for some time and are already rolling-out corresponding services,” he said. “The losers here are going to be retailers that are already behind the curve and don’t have the financial strength to make the investments to develop these capabilities.”

John Zolidis, president of Quovadis Capital, in a note Thursday blamed the deterioration on those cuts to labor.

“We attribute the weakness to the competitive environment but also the company’s decision, starting in the first quarter last year, to significantly reduce labor hours in the stores, which we believe directly impacted service and, subsequently, traffic,” he wrote.

“We believe a Disney streaming offer could easily become a must-have subscription, perhaps even more successful than Netflix (which currently has access to much Disney content),” says equity analyst John Zolidis.

John Zolidis, president of Quo Vadis Capital, said that because of its Family Dollar acquisition, Dollar Tree believes it now has the expertise to try to boost prices at its namesake stores. But it’s a risky proposition.

“The $1-only proposition is what makes people love Dollar Tree so much,” Zolidis said. “Moving away from that brand equity does present a pretty significant risk to the concept on a long-term basis if it becomes just another store. Right now, it’s unique.”