The company may be widely touted as the ‘Amazon of Africa,’ but the NYSE-listed stock Jumia (NYSE: JMIA) is in trouble today after sliding down nearly 12% in pre-market trading on second-quarter numbers where revenue missed expectations.
Although profit grew 94% year-over-year, it wasn’t enough to meet analyst projections, with revenue of $43.5 million instead of the expected $45.8 million. Jumia stock slid down from a high of $15.91 Tuesday morning to $11.83 this morning, before clawing back to over $13 as of midmorning.
The two co-CEOs of this regional commerce giant found a way to spin the news toward positive growth strategy:
“These results reflect our continued focus on offering a relevant and engaging online shopping and lifestyle destination for consumers, while providing our sellers with an attractive value proposition and a platform to grow their businesses,” wrote Jumia CEOs Sacha Poignonnec and Jeremy Hodara in a response statement. “We remain focused on all aspects of our growth strategy, particularly JumiaPay, as we continue to drive its usage in our markets.”
However, some analysts see mismanagement of Jumia hurting its general prospects for market opportunity in the region with a young population that may get improved Internet access in the years to come.
“Given concerns over the credibility of the company and its relatively poor operating results so far, I believe Jumia is too risky as an investment until the fraud allegations are resolved and more progress is made in the underlying business,” writes Richard Durant today at Seeking Alpha in Jumia analysis.
Currently, Durant points out, e-commerce in Africa is, as he says, “a difficult business.”
“The markets are highly fragmented and have underdeveloped logistics and digital payments capabilities,” Durant writes. “Many regions do not have an organized address system, making deliveries inefficient and reliant on local expertise. The growth and profitability of e-commerce in Africa will likely be largely limited by development of infrastructure, logistics and digital payments capabilities. In addition, many countries have political instability and the potential for changes in regulatory and/or other government policies.”
Look for movement on this major equity throughout the market day.