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December 6, 2022
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Business

Jumia plans to boost activity in buoyant markets

(Ecofin Agency) – Jumia Technologies continued to strengthen its profitability in the third quarter of 2020. Its revenues for the first 9 months of 2020 were down by 28% compared to the same period in 2019, from €111.1 million to €97.8 million.

Compared to the activities of large companies in the same sector, such as the Chinese company Alibaba and the American company Amazon, this seems to be a counter-performance. But for Jumia, this represents a redeployment of its business objectives since 2019.

The new strategy now consists of being present in buoyant markets, with the potential for positive margins, rather than on the entire continent. This choice has paid off.

The gross operating margin of the e-commerce platform focused on Africa, but listed on the New York Nasdaq, was €65 million over the period under review. It benefited from an increase in the number of customers, combined with a reduction in expenses incurred to achieve sales, in line with the reduction in the number of countries where the company operates.

In this context, losses for the period were contained. They went from just over €166 million to only €1.14 million. Despite this continued loss on its income statement, investors remain confident in the company’s prospects. On the New York Nasdaq, its stock market value shows a capital gain of 92.57%.

With a market capitalization of just over $1 billion, Jumia is overrated on the stock market. Experts from Citron Research explain this situation by the fact that Jumia is now the perfect symbol of hit-or-miss on the stock market. Its share value may reach $150 in five years, or the company will be forced to close its doors, especially if the young class of Nigerian consumers refuses to adopt e-commerce as a shopping model.

Idriss Linge

Source : https://www.ecofinagency.com/finance/1211-42051-jumia-plans-to-boost-activity-in-buoyant-markets

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