A Year now since JUMIA was listed on the New York Stock Exchange market (NYSE).
We have kept you updated from day one of it’s listing and today we shall be given you details on Jumai ”Africa Amazon” We are ANC Stock Investment Ltd, We invest for the future.
A year ago , Jumia, the largest e-commerce operator across Africa, became the first major African-focused tech company to list on the New York Stock Exchange (NYSE).
Jumia’s listing was seen as a major milestone for Africa’s fledgling tech ecosystems and for a company which had expanded to 14 African countries with businesses across several verticals since it was first founded in Nigeria in 2012.
www.ancstockinvestments.com/forex
Before its listing, investors with a track record of backing e-commerce ventures in emerging markets predicted that the novelty of an Africa-focused tech company listing on NYSE would initially prove a draw, especially among retail investors. And that turned out to be the case in the company’s first days of trading. Jumia went on to raise $196 million through its initial public offering (IPO) and its stock soared on its opening day of trading, closing 75% up valuing the company at over $3 billion.
Those fortunes have changed drastically as this one year pass.
After peaking at a high of $49.77 within its first week of trading in April 2019, the stock had crashed below its IPO price by August. Jumia lost its “unicorn” status by September and the stock now trades just over $3 or around $250 million in market capitalization.
The initial run was the result of “a confluence of market conditions, a scarcity of this kind of opportunity [an African tech company listing in New York] and a lack of interrogation because they were so many reputable anchor investors already in the business,” Those investors included Africa’s largest telecoms operator MTN, French insurance giant AXA and Swedish telecoms operator Millicom. Global payments giant Mastercard also invested $56 million in a private stock sale ahead of the IPO.
Jumai’s shortcomings
Jumia’s first battle amid its IPO came in form of a debate over its identity. Despite being incorporated in Germany, listed in New York and headquartered in Dubai, Jumia’s definition of itself as African in its S1 filing prompted intense scrutiny from African industry insiders. As Jumia CEO and co-founder, Sacha Poignonnec, explain that the company’s identity stems from its focus “to bring some value to the African consumers.”
The company’s first post-IPO earnings call came on the heels of damaging allegations of fraud and “material descrepancies.
The company leadership dismissed that and maintained operations were “transparent” even as its share price tumbled.
our months later however, the claims of fraud came from within the company itself as Jumia disclosed it had uncovered instances of improper orders being placed and subsequently cancelled on its marketplace platform. Jumia claimed the fraudulent orders had no impact on its financial statements even though they had wrongly inflated its order volume by around $17.5 million.
Pursuing profit
Jumia has told investors it has a target of attaining profitability by 2022. It is still reporting major million-dollar quarterly losses but not trending towards reducing losses.
While Jumia has now stepped up cost-cutting measures, shutting down operations in Rwanda, Tanzania and Cameroon in the last six months, it has also doubled down on its existing markets, exploring ways to widen its user base, order numbers and revenue.
Last July, Jumai partner with Vivo energy to set up pick-up stations at Vivo’s over 2,000 fuel station outlets, allowing customers place and pick up orders as well as make payments.
After months of testing and using Jumia Pay, its in-house payments solution, within its marketplace ecosystem, Jumia has stepped up plans to spin off the service and open it up to third party users. The service which is now live in six African countries has already shown promise with payments volume and value more than doubling last year, according to Jumia’s financial statements.
It’s yet unclear if or when Jumia’s long-term bet and investment in African e-commerce will pay off for investors. But one exit possibility could come in form an acquisition by a global e-commerce player, Satchu claims. “They do have a first mover advantage and with these sort of valuations, it might be attractive for a bigger player to scoop them up as a quick market entry point.” It’s an of-cited exit theory among local industry insiders.
Invest with us today at www.ancstockinvestments.com
