Jumia shares - Afrikan Heroes

Investors Betting on Jumia as Shares Soar

January 23, 2021

There are indications that Africa’s first unicorn, Jumia Technologies is having a bullish time as its shares value has been rising trading above 10% after a prominent investor best known for going short said the African e-commerce company’s stock is poised to go higher after a great holiday season. Jumia, a Franco-German company that provides e-commerce sales and services in a number of African countries, has been a battleground stock for the better part of a couple years. Bulls marvel at the potential of Jumia becoming the Amazon of Africa even though one of its top executives maintain that they are Jumia, not Amazon, while bears worry about the logistical and other hurdles it faces trying to get there.

Jumia in 2019 was a target of short seller Citron Research, which called it an “obvious fraud.” With the stock both up 500% in the last 12 months, and still largely unchanged from its early trading daysm,Citron has since had a change of heart concerning the company, reiterating its bullish stance. The investment firm on Wednesday tweeted that the stock is likely to double from here. Citron bets that Jumia, which currently trades at about $44.50 apiece, is “on its way to $100,” according to Citron, which called it the “largest opportunity in e-commerce.”

Citron attached a Jumia graphic highlighting business milestones in 2020, including the site’s record 113 million visits on Black Friday 2020 and a 55% jump in transactions on Jumia’s payment platform compared to Black Friday 2019. The firm said the Black Friday success “validated” Jumia’s opportunity, and should bode well for the company’s future.

Investors should note that Jumia remains an early stage company with a lot to prove and a lofty valuation. This company isn’t yet the slam dunk success story that Amazon is, or that MercadoLibre is becoming in Latin America.

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

MTN Group sells Shares in Jumia for $142 million

October 31, 2020

Africa’s biggest telecommunications giant, MTN Group has announced the offloading of its stake in Jumia, one of Africa’s largest eCommerce firms making a net proceeds of $142.31 million dollars from the sale. This move is part of MTN’s ongoing efforts to streamline its portfolio and minimise debt by disposing of its non-core businesses. Recall that in August 2020, a week before the Jumia’s Q2 2020 earnings call, MTN announced that it was planning to sell off its 18.9% stake in Jumia and telecom tower company, IHS towers.

Then, MTN said that it had not finalised the decision. But it now reveals that it made a filing with the New York Stock Exchange to prepare for a secondary sale of its shares. “We are proud to have been a partner in the evolution of one of Africa’s pioneering online marketplace businesses and will continue our relationship with Jumia through ongoing operational partnerships in some markets,” MTN said in a statement.

In April 2019, Jumia became the first African tech company to list on the New York Stock Exchange, and its shares soared to hit a $2 billion valuation. Yet, its failure to make a profit, a short-selling article from Citron, and issues with partners all sent its stock crashing down.

Six months later, Jumia had lost its unicorn status and its shares sold for as low as $3 at the start of the pandemic.

In March 2020, Rocket Internet sold off its entire stake in Jumia but did not fully reveal the financial details behind the deal. Interestingly, Jumia’s stock rose 142% in the months following the pandemic and it briefly regained its unicorn status.

But MTN’s announcement in August caused fresh uncertainty for investors. When Jumia finally released its financial results, its shares fell once more to single-digit numbers.

Andrew Left, writer of the short-selling article that initially sent Jumia’s shares tumbling down, seemingly had a change of heart. His article earlier in October 2020 began to attract investors once more.

In the last 7 days, Jumia’s shares have steadied between $16 – $19 and its market cap has reached as high as $1.5 billion. A negative pre-market movement has followed MTN’s announcement, but it has remained within the price range of the last seven days –$17.25 and it’s currently valued at $1.35 billion. MTN initially had a 40% stake in Jumia, but over the years, the stake gradually dropped to 31.28%, and then 18.9% by the end of 2019. All things considered, we estimate the value of MTN’s sale to be between $250 million – $255 million.

Jumia is expected to announce its earnings for Q3 2020 on November 10, 2020, and hopes will be high for anyone with the slightest interest in the online retail space in Africa.