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Looking to Play the Luckin IPO? You May Be Better Off Playing the Preakness

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Luckin Coffee's (LK) initial public offering was priced at the higher end of its target range, setting up a debut Friday on the Nasdaq that will value the China-based rival to Starbucks (SBUX) at more than $4.2 billion.

The company, which was founded in 2017, is expected to price at the higher end when it begins trading. Shares of the company are expected to price around $15 to $17.

Jeff Marks, senior portfolio analyst with Jim Cramer's Action Alerts PLUS investing club, weighed in on the IPO and why he cautions investors against playing the IPO.

"[IPOs] can be tough. I do know that they are a competitor of Starbucks, but Starbucks seems to have a pretty strong grip in the Chinese market. So what I would say is that, look, if you're trying to play this IPO, you might have better luck at the Preakness this weekend playing one of the horses. Because some of these are tough. I mean, you saw, we talked about Pinterest a few minutes ago. They can be tough, but hey, it is exciting. It's an exciting day for Luckin IPO if you've been in an investor there," said Marks.

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