As a leading e-commerce platform in Africa, Jumia Technologies (JMIA) is making strategic moves in the face of challenging macroeconomic conditions, with the stock down over 24% in the past three months. However, the company recently announced plans to cease operations in South Africa and Tunisia, shifting focus and resources to more promising markets. As part of its growth strategy, Jumia has partnered with Hepsiburada, a Turkish e-commerce platform, enabling a broader product offering for Jumia’s customers.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Despite the operating losses reported, the company’s strategic endeavors set it on a path toward improved operational efficiency and overall growth. Investors interested in investable opportunities in Africa may want to keep their eyes on this stock for signs of progress before taking action.
Jumia Evolves Its Platform
Jumia Technologies is a leading African e-commerce firm that operates a platform in multiple regions worldwide, including West Africa, North Africa, East Africa, Europe, and the UAE. The company’s operations encompass a marketplace that links sellers and customers, a logistics service for the delivery of goods, and a payment service under the JumiaPay brand.
The company has announced its plan to cease operations in South Africa and Tunisia by the end of 2024. This strategic termination is due to these regions’ lower performance and growth potential, which accounted for only a tiny fraction of total orders and GMV. The company’s CEO, Francis Dufay, stated that this decision was based on a thorough analysis, noting that competitive and macroeconomic conditions limited the growth potential in these territories. This move will allow Jumia to concentrate its resources on other markets with significant growth potential.
Jumia has also partnered with Hepsiburada, a top e-commerce platform in Turkey, to list its private-label products and select Turkish brands on Jumia’s platform. The partnership aims to provide consumers access to a broader range of authentic and high-quality Turkish products, thereby expanding Hepsiburada’s global footprint and strengthening Jumia’s value proposition.
Jumia’s Recent Financial Results
The company posted results for the third quarter of 2024. Revenue was $36.4 million, a 13% decrease year-over-year. However, the operating loss was up 10% year-over-year at $20.1 million. Adjusted EBITDA loss increased to $17.0 million, up by 15% year-over-year.
Gross merchandise volume (GMV) was $162.9 million, slightly down by 1% year-over-year but up a significant 29% in constant currency. The company’s liquidity improved to $164.6 million, thanks to an increase of $71.8 million in the third quarter of 2024, including net proceeds from the August 2024 At-the-Market offering. This shows a vast improvement from the decrease of $19.0 million in the third quarter of 2023. However, net cash flows in operating activities amounted to $26.8 million, an increase from the previous year’s $24.0 million.
Final Verdict on JMIA
Jumia is thinly followed by Wall Street, so looking to analyst recommendations and price targets provides little guidance. Also, while the ownership structure is a mix of institutional, retail, and individual investors, only 17.69% of the company’s stock is owned by Institutional Investors. There is no overwhelming demand from the “smart money” to accrue and hold the shares.
The stock has been highly volatile (beta of 2.81). It has been down over 79% in the past three years, up 52% in the past year, and down 37% in the past six months. It trades at the lower end of its 52-week price range of $2.46 – $15.04 and shows negative price momentum as it trades below all major moving averages.
Given its volatile profile, lack of robust Wall Street support, and minimal institutional buying, investors might want to hold off on the stock until a brighter picture emerges.
