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Jumia Technologies: An Investment In The Reopening And Digital Future Of African Economies

Mar. 01, 2021 2:23 AM ETJumia Technologies AG (JMIA) Stock23 Comments
Ahan Analytics profile picture
Ahan Analytics


  • JumiaPay demonstrated strong adoption and growth numbers. Logistics and advertising showed promising potential.
  • User growth remains sluggish but promises to accelerate after more investment and the end of pandemic-related headwinds.
  • Expect more volatility and a wide range of outcomes for Jumia's stock price in 2021.

Jumia Technologies (NYSE:JMIA) has experienced a dramatic run-up in the price of its shares since bottoming with the stock market last March. Ahead of the Q4 2020 earnings report, JMIA even surpassed the all-time high from the days following its IPO in April 2019. This latest earnings report is an opportunity to take a hard look at Jumia's prospects relative to its current stock price.

Jumia Technologies took the roller-coaster path to its current lofty levels.

The earnings report was as bullish as ever, but JUMIA's sales and user adoption results were negatively impacted by the COVID-19 pandemic. These impediments make Jumia one of Africa's re-opening plays. Political instability in Nigeria and Uganda are also clear and present risks to the company. As a result, JMIA did not provide specific numbers for its guidance in its year-ending report:

"Our focus continues to be on making further progress towards breakeven and we remain committed to reducing our Adjusted EBITDA loss in absolute terms in 2021 compared to 2020.

The ongoing COVID-19 pandemic as well as the ensuing economic challenges result in substantial uncertainty concerning our operating environment and financial outlook. This may be further exacerbated by instances of social protests or political disruption, as experienced in Nigeria over the course of October 2020 as part of the End SARS campaign or in Uganda in January 2021 where internet was suspended ahead of the presidential election.

These external factors, combined with continued focus on cost efficiency and, to a lesser extent, the continued effects of the business mix rebalancing, are likely to drive continued volatility across some of our key performance indicators."

For this report, I focused on JumiaPay and user growth and adoption. I took a new interest in Jumia's logistics and advertising businesses.


JumiaPay is the company's digital

This article was written by

Ahan Analytics profile picture
Dr. Duru has blogged about financial markets since the year 2000. A veteran of the dot-com bubble and bust, the financial crisis, and the coronavirus pandemic, he fully appreciates the value in trading and investing around the extremes of market behavior. In this spirit, his blog "One-Twenty Two" (https://drduru.com/onetwentytwo/) delivers a different narrative for students and fans of financial markets. Dr. Duru challenges conventional market wisdoms and offers unique perspectives. The blog posts cover stocks, options, currencies, Bitcoin, and more, while leveraging the tools of both technical and fundamental analysis for short-term and long-term trading and investing. Some of these ideas and analyses are also featured here on Seeking Alpha.Dr. Duru received a B.S. in Mechanical Engineering (and an honors degree in Values, Technology, Science and Society - now simply STS) from Stanford University. For graduate studies, Dr. Duru went on to earn a Ph.D. in Engineering-Economic Systems (now Management, Science, and Society). Dr. Duru's work experiences include:*Independent consulting in operations research and decision analysis*Management consulting in product development and technology strategy*Price optimization software for computer manufacturers and internet advertising (including a shared patent for methodology)*Business Intelligence and Data Analytics, including some Data Science and Data EngineeringConsulting practice: https://ahan-analytics.drduru.com/

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in JMIA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (23)

@Duru though on today's dip due to the ATM offering, sir?
Ahan Analytics profile picture
@thedukeoforange Buying opportunity. I started by selling a weekly $40 put expiring next Friday. I did something similar in the last dip. The short put expired worthless (so I was not assigned). My huge caveat/wildcard is how emerging market investing responds to the growing angst over higher rates. I am now keeping an eye on EMB - the emerging market bond ETF. If it breaks recent lows, I expect JMIA to follow. We just have to brace ourselves during this period.
@Duru thank you sir.
@Duru Thanks, quite interesting, very good interpretation about Jumia. I think the company has a lot of potencial in a near future.
A company this young with such a long runway for growth should not be focusing on profitability. This company is already going into self preservation mode. Good thing they did that equity raise in December. Gives them more time in hopes of either JumiaPay or maybe their logistics business taking off because their marketplace is DOA
Ahan Analytics profile picture
Thanks everyone for reading. Quick update on my take as pressures mount in the general stock market. JMIA closed at its lowest point since Jan 12th. The risks of a test of the 2021 closing low increased significantly. If the stock gets there, I like buying (or selling puts again). I just noticed a good correlation in place between Jumia and the South African rand from October, 2020 to early February. I am going to include monitoring this relationship as a potential indicator of risk appetite for JMIA.
Ahan Analytics profile picture
JMIA bounced almost perfect off Jan 6th support. Nice. 🤞🏾
El Financeiro profile picture
Thanks. I started buying JMIA in 2019 and thru may 2020 as a 3-5yrs out. Never expected this run up. The valuation has gotten ahead of itself (not complaining on my 5x return so far). But I’ve been waiting to add at anything below $30.. since it’ll be unlikely I’ll ever get it below $10 again.
China owns Africa, it will become one of their territories in 10 years like HKG and Taiwan. Jumia could easily be bought out by some CCP own company.
or....it could be bought by Alibaba or Tencent
@tmcooper Alibaba is Chinese company.
Ahan Analytics profile picture
@Bobbie B I agree Jumia could eventually be a buyout target. Any large digital/e-commerce company could find them attractive in about 2 or 3 years. Should be interesting.
Many thanks, very good article! Buying more
leearther profile picture
thanks, fair outline of difficulty and potentials.
am in. long.
thumperjr profile picture
Thank you for your insight, adding shares at the moment.
That why I am in JMIA
I’m bullish on the name and long common shares. Thank you for the writeup.
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