In the year since Africa-focused e-commerce firm Jumia listed on the New York Stock Exchange, it has suffered persistent losses.
The Dubai-based firm saw its stock price decline by more than 90 percent since it listed in April 2019. On April 16, 2019, four days after its IPO, the shares were trading at $49.77.
Its valuation is less than a 10th of the $3.8 billion valuation it commanded at its highest point in April 2019.
Jumia’s struggle to deliver on its potential as the “Amazon of Africa” may negatively impact other African startups and how they are perceived, says Kenneth Agutamba, an analyst and chief strategist at Rwanda-based corporate communications firm Impact Communication Strategies.
The firm’s IPO represented the first time an African unicorn — a tech company valued at more than $1 billion — successfully listed on an international exchange.
Jumia’s failure has created a negative sentiment that future African tech IPOs will have to contend with, according to TheAfricanReport.
That sentiment may be unfair, however, as some people in the African tech space dispute that the company is even African, says pan-African digital economy analyst and blogger Ray Umukoro.
“The misfortune of Jumia at the NYSE should not be used to gauge Africa; rather the world should beam attention on Konga, Kilimall and other truly African e-commerce outfits,” Umukoro told TechFinancials.
While Jumia operates in 11 African markets and has built a narrative around being an African company, questions about its identity remain.
Founded by Frenchmen Sacha Poignonnec and Jeremy Hodara, Jumia is incorporated in Germany, based in Dubai, and its central tech team is in Portugal. Only its market is African.
After initially jumping to almost $47 a share on May 1, 2019 – three times the listing price of $14.50 a few weeks earlier – Jumia shares started falling.
In May 2019, Jumia’s stock came under attack from short-seller Andrew Left, whose firm Citron Research issued a report accusing the company of fraud.
In August 2019, Jumia admitted to internal staff fraud involving fake orders placed and subsequently canceled to inflate sales in Nigeria, one of its largest markets.
The staff fraud affected sales worth $17.5 million, with agents inflating the sales to earn additional commissions, according to Marketwatch.
In Q4 of 2019 alone, Jumia lost $66 million, bringing its total operating loss for that year up to $247 million, Forbes reported.
In December 2018, French drinks company Pernod Ricard SA bought 5.1 percent of Jumia for around $84.2 million, valuing the e-commerce firm at around $1.5 billion and making it an official tech unicorn.
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Jumia planned for profitability by 2022, but that seems unlikely.
In an effort to cut costs and focus on its stronger markets, Jumia closed its operations in Rwanda, Cameroon, and Tanzania in 2019.
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