Jumia, the ‘African’ ecommerce company that has its corporate headquarters in Dubai and operations in 14 African countries including Egypt, Morocco, Tunisia, and Algeria, continues to struggle after an initial good run at the New York Stock Exchange. It’s stock closed at $6.68, an all-time low, on Friday, with the market cap going down to ~$520 million.
For the sake of context, the Rocket Internet-founded Jumia had become a unicorn (with a valuation of $1.08 billion) in 2016 (when it was known as Africa Internet Group or AIG) after raising $326 million from Goldman Sachs, MTN, and AXA Insurance.
The company that went public six months ago in what was the first American IPO for an ‘African’ startup had seen its stock soar over 300 percent to peak at $46.99 just three weeks after its debut at the New York Stock Exchange, taking company’s market cap to (over) $3.5 billion.
But that didn’t last long. Jumia’s stock started struggling after Citron, a US-based online stock commentary website published a report (PDF) accusing Jumia of fraud saying that its equity is worthless.
The report by Citron had claimed that Jumia’s F-1 filing with the United States Securities and Exchange Commission that the company had filed in March earlier this year and a confidential investor presentation that Jumia had made last year had a lot of material discrepancies.
“The most disturbing disclosure that Jumia removed from its F-1 filing was that 41% of orders were returned, not delivered, or canceled. This was previously disclosed in the Company’s October 2018 confidential investor presentation,” the report by Citron had noted.
Even though Jumia refuted the claims made in the report, the stock was never really able to recover and has now lost 80 percent of its value from its high of $46.99 in May earlier this year.
Citron’s report may have caused the initial decline in value but a lot of other things also contributed towards this massive loss in share prices, including Jumia’s increasing operating loss that reached $73.6 million (€66.7 million) in second quarter of 2019. It was $46.2 million (€41.9 million) for the same period of 2018.
The revenue of the company, however, for the same period, increased by 58 percent to $43.3 million (€39.2 million), GMV by 68.9 percent to $310.1 million (€281 million). The number of LTM (Last Twelve Month) also grew to 4.8 million, up from 3.2 million a year ago.
But nothing has been able to help Jumia.
It’s lockup period during which the pre-IPO shareholders of the company are restricted from selling their shares, ended earlier this week, but as TechCrunch citing third-party data reported, no one from Jumia’s big shareholders seem to have offloaded their stock yet.
MTN, the South African telecom company that is one of the largest shareholders of the company was reportedly planning to sell at least half of its stake after the expiry of lockup period.