JUMIA TECHNOLOGIES AG [NYSE: JMIA], Africa’s leading online shopping giant recently joined the big boys on the New York Stock Exchange (NYSE) following a successful IPO. It is seven years since the firm was founded. Its success has been tremendous over the years, besides it recorded a 48% growth last year alone. The massive growth had the founders: former McKinsey & Co. colleagues Sacha Poignonnec and Jeremy Hodara toying with the idea of a public offering.
According to Bloomberg, Jumia Technologies AG sold 13.5 million America Depositiry Shares at an initial price between $13 – $16. The company raised a total of about $200 million at the end of the IPO; funds that Jumia Technologies AG plans to use for the purpose of increasing flexibility and brand awareness among its investors.
Commonly referred to as Africa’s Amazon, Jumia Technologies AG stocks saw a massive surge on the first day it was listing on NYSE. An increase of more than 75% was enough to attract investors who wanted to know the newest kid on the block.
The stock soared to $25.46 on Friday, April 12, 2019, bringing the valuation of the company to roughly $1.9 billion. JMIA continued with the surge on opening this week’s trading on Monday. A high was formed around $49.77 (April 17) before a correction began. The stock trimming gains exercise in the last couple of days has seen it form a low at $31.70 on April 18 where it had total volume for the day around 6,954,414 shares. A correction has occurred from the low only to close on the eve of the Easter holiday at around $35.15.
According to the real-time data by Nasdaq, JMIA previous close was $40.07. It is down about 13% today (April 18, 2019) from an intra-day high of $38.40. JMIA is currently valued at $34.80 following a -5.27 change on the day. The fundamentals are still very positive for this stock. Besides, technical analysis suggest that it is poised for potential gains towards the 52-week high formed at $49.77.
Jumia plans to capitalize on the markets that are yet to be tapped by the United States ever-growing online shopping behemoth, Amazon. Unlike Amazon, Jumia is faced with poor infrastructure on the African continent. As Africa’s leading online retailer, Jumia leases warehouses, pick-up and drop-off stations. In addition to that, the retail powerhouse has partnered with various delivery companies to ensure that it offers reliable services.
According to the latest report, the African continent supports only 1% of Jumia’s online retail sales. China accounts for 24% of the online sales as per the data provided by Euromonitor International. The company still views these statistics as an opportunity for growth on the African continent as people continue to adopt smartphones and related technologies. As mentioned, Jumia posted a 48% growth in 2018 with revenue totaling around $147 to $150 million.
Jumia is currently headquartered in Berlin. It was initially funded by an incubator organization, Rocket Internet SE. Investors should, however, note that Jumia is operating in losses, besides in 2018 it suffered 170-million-euro loss. The company told investors during the IPO that since its inception it has posted losses of 800 million euros and is still depending on outside funding to offset the negative cash flow. However on the bright side, Jumia processed gross merchandise sales in 2018 of $937.4 million.
From a short term technical approach, the stock looks to have bounced around the low $30 range and could be poised for its next short term move.