Jumia’s key investor, Rocket Internet, has sold its stake in the giant e-commerce firm leading to speculations that all may not be well with Jumia. Rocket Internet, the German tech investment firm appears to have taken the option of divesting and severing ties with Jumia which has seen its shares fall steadily since going public last April. Analysts say that Rocket Internet picked the worst time to express its intention to dumps the 11 percent stake in Jumia at the beginning of the COVID-19 crisis, a period the e-commerce giant has seen sales dropped considerably because of the lockdown across many African countries. Recently, it had some of its outlets in Lagos, Nigeria sealed off for contravening the shut down order.
Jumia has been going from one challenge to another since its celebrated listing on the New York Stock Exchange (NYSE) last year when its shares soared remarkably but the progress was cut short when a report put out by short-seller Andrew Left’s Citron Research alleged fudged numbers in its sales figures. That singular act sent Jumia shares crashing down and things haven’t quite gotten really better since then. Some months later, Jumia did reveal that members of its J-Force sales team in Nigeria had indeed tampered with the numbers, though the company maintained that it wasn’t significant.
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Since last April, quarterly results have reflected mounting losses and Jumia has since moved to downsize its e-commerce business, exiting countries like Cameroon, Rwanda and Tanzania and scaling down in others. With the decision of Rocket Internet to divest from Jumia, a decision many say is a sign of loss of confidence in the company, observers say that Jumia needs to take hard decisions on its remaining business lines, or attract the right type of investors to be able to stand post Covid-19 crisis.
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However, critics say that Rocket Internet is in the habit of investing in startups and within a given period, scale down their investment, and finally sell off. This business attitude they say is behind Roket’s reputation as a “German startup cloning machine” due to its knack for copying and replicating successful business models in new markets, mostly outside the United States. How Jumia stays afloat in the present global business challenges, remains to be seen says one business analyst who prefers not to be mentioned.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry