(Bloomberg) -- Luckin Coffee Inc., the chain trying to take on Starbucks Corp. in China, plunged the most since its U.S. trading debut in May after it issued earnings for the first time as a public company.

Luckin, which is based in China and listed in the U.S, said it was taking a hit from trade tensions and the slowing Chinese economy as it races to open stores and burns cash to build market share in China’s nascent coffee market.

The shares sank 17% to $20.44 in New York on Wednesday. The shares were up 44% from the $17-a-share initial public offering price through Tuesday’s close.

Despite the share plunge, which came on a day when global recession fears were weighing down markets, Luckin is on track to start breaking even at its individual locations this year, according to Chief Financial Officer Reinout Schakel. He added that the company could benefit from its lower prices if trade tensions and the weakening Chinese economy continue to hit consumers.

“With the proposition we have around affordability, we’re well-positioned to weather that storm,” Schakel said in an interview.

Luckin posted a net loss of 681.3 million yuan ($97 million). Revenue was 909.1 million yuan, compared with analysts’ estimates of 909 million.

It is seeking to overtake Starbucks in China by opening more stores in two years than the industry giant has in 20 years. Investors have questioned the Xiamen, China-based company’s strategy of sacrificing profits to lure new customers with discounts when the Chinese economy is growing at its slowest pace in three decades, while a prolonged U.S.-China trade war damps consumer confidence.

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China is becoming an increasingly important market for coffee retailers as the country’s middle-class tea drinkers develop a taste for java. Luckin has an uphill battle, as it claimed only 2.1% of the market last year, while Starbucks has more than a 50% share and also plans to continue its rapid expansion by opening one store every 15 hours.

Luckin’s store count may be on track to overtake Starbucks this year, but the vast majority of its outlets are kiosks for delivery and takeaway, unlike the plush hang-out spaces at Starbucks.

(Updates with closing share price. Previous version corrected to show figures in sixth paragraph are net loss rather than operating loss)

To contact the reporters on this story: Jeff Sutherland in Tokyo at jsutherlan13@bloomberg.net;Craig Giammona in New York at cgiammona@bloomberg.net

To contact the editors responsible for this story: Rachel Chang at wchang98@bloomberg.net, Anne Riley Moffat

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