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Jumia: Best African Stock With 1,000% Upside Potential

Mar. 03, 2021 1:01 PM ETJumia Technologies AG (JMIA) Stock63 Comments
Investor Trip profile picture
Investor Trip


  • Jumia reached over 6 million active consumers during a global pandemic with a booming food delivery and digital payments business.
  • The company will improve once pandemic fears are over and looks undervalued in comparison to e-commerce giants like Amazon and Alibaba.
  • Jumia will grow as Africa embraces widespread digital technology.

Jumia Technologies (NYSE:JMIA) is an e-commerce and digital payment business with strong interests in Africa. The company was founded in Lagos, Nigeria back in 2012 and is now active in 11 African countries.

The company is based out of Germany but has outperformed bigger e-commerce brands like Amazon and Alibaba for the highly coveted African e-commerce market.

Jumia stock soared off its March 2020 lows from around $2 to $60+ in early January 2021 until much of the hype faded during its February peak.

While JMIA stock is down a bit from its 52 week high, I think long term investors will be rewarded for having a long term perspective on the e-commerce jewel of Africa.

Jumia's Business Model

Jumia focuses on 3 core businesses: e-commerce, food delivery and digital payments.

While most e-commerce companies in developed countries saw soaring profits during the pandemic, Jumia struggled to grow due to logistic and supply challenges.

The global pandemic hurt Jumia's business and I expect GMV to improve once pandemic worries ease.

In the latest Q4 2020 report, Jumia GMV was 231 million euros, up 23% QoQ.

The company recently changed its business model from a 1st party direct seller to a 3rd party model like Amazon uses.

Jumia DeliverySource: Jumia.com

Jumia Food delivery is a fast growing business that now makes up around 20% of overall transactions on the platform.

Jumia completed 5 million food deliveries in 2020 and the company recently expanded in Egypt after the exit of Uber Eats.

The 3rd party e-commerce model allows Jumia to facilitate more transactions on its platform and generate seller fees like Amazon, eBay, and many other e-commerce platforms.

Even though Jumia is experiencing some short-term challenges, there is no denying that Jumia's userbase continues to grow.

Annual Active Consumers reached

This article was written by

Investor Trip profile picture
Investor Trip is an investment research company founded in 2006 by Tarik Pierce. Tarik Pierce studied Economics at Dartmouth College and focuses on high CAGR stocks and cryptocurrencies. Our investment strategy is to identify sectors with massive growth potential then pick the biggest & best companies that will become future winners. Follow us to receive notifications whenever a new article is published.

Analyst’s Disclosure: I am/we are long JMIA. 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 (63)

Today, Jumia is down 95% since publication. Like going back to this kind of articles and comments as they are valuable pieces of investment advice. Makes me think of the famous remark from Scott McNealy - CEO of Sun Microsystems during Dotcom bubble: "What were you thinking".
It also makes me confident that I am going to make above average returns as enough market participates will be driven by cognitive biases such as greed, impatience, oversimplification, boredom, etc. (Sold my stake with a 500% return a couple of weeks before the discussions below - potentially to some of them).
We need to put a base in. Not sure why this keeps falling if prospects for future growth remains in tact.
@danforthgs The guy from mad money, Jim Cramer, last Thursday told a caller he wasn't a fan. He has a big audience, that could be a reason for some of the recent weakness.
Xenogears23 profile picture
@oakraid he will like it more when it's over 100
if it goes under 10 ill buy
Bright spot profile picture
@StefanIanos ; Guess you're not buying :)
Raphdaking profile picture
Not 10,000%?
This is non-sense. Crazy speculation about Jumia.
I love the company, and I had shares before. But it is clear that Jumia is not going anywhere. It is worthless to compare the size of Jumia vs. Amazon or MercadoLibre.... The key here is the GDP/capita. 3400$ for Tunisia (the highest - by far- for almost all Jumia countries) vs. ~9000$ for Brazil, 11600$ for Argentina and 63800$ for the US.
Africa does unfortunately not have what it takes for e-commerce to take off. And things are not getting better.
You just need to check the number of Jumia users to realize that this is growing very slowly.
Otherwise, I wish the management good luck, and all the best.
@EngiVestor Ummm yes. Did the author actually compare the actual stock price (not relative to anything?) to that of Amazon and Mercado??!! Good lord
Dr Bulltrap profile picture
@cgreener this is literally what he did :DDD
"When compared to other e-commerce companies, Jumia stock looks massively undervalued."
Good dip to buy today
LostOkie51 profile picture
@thedukeoforange Yeah, for JMIA, and a thousand more names! I'm nibbling a little but not too much. Maybe some more downward moves in the weeks ahead. Pace yourselves.
I rather invest in a chinese company. At least they have paved roads and internet, and know how to cook the books.
@nahplease You realize Africa is a continent and not a country like China right?
Emerald profile picture
Investors should view Jumia as highly speculative. To say there are infrastructure and logistics problems is a massive understatement. An e-commerce company needs significant volume. Lack of intent connections and cash on delivery (i.e. no credit cards) are serious obstacles. Jumia may become successful, but it will be a long time from now. Caveat emptor!
HardytheTrader profile picture
Did you just use the share price of other e-commerce companies as a justification for $JMIA valuation? Good grief. No wonder this stock is trading so high. Seeing a company like this makes me wonder if the recent pullback was just a foreboding of what will happen to momentum stocks later this year. I hope I'm wrong
@HardytheTrader hahaha had the exact same reaction. Reee-donkulous!!
meli i picked at 6Bl
bazooooka profile picture
Was a nice ten bagger from last year this time; not sure it can do it again.
having a vision and idea is what the market is all about.If the roads were paved and etc etc.A lot of obstacles in Africa unlike other countries I agree but the attitude from some of you if man was meant to fly he would have wings does not cut it.This company has to have more expanded warehousing to improve logistics and less wear and tear on vehicles #1.Funding is very very important to accomplish this and supply chains must be reliable and stream lined and over expanding can kill all of this.glta
tssai98 profile picture
Does Jumia Pay allow or plan to allow Crypto transactions?
arok79 profile picture
Definitely a solid market in Africa. People with money to spend heheh
Bright spot profile picture
@arok79 : Quite a few of them.
arok79 profile picture
@Bright spot I look forward to a bright JMIA future. Highly likely will be proven wrong however.
Bright spot profile picture
@arok79 ; I was thinking on this, and you think that most people believe all of Africa is like Somalia or other war torn country there. But you have a lot of thriving places rich in oil, or other minerals. JMIA has a future there. Will it rocket a 1000% from here, maybe it'll double this year, maybe more, just got to buy, hold, and take the wild ride.
People always are quick to judge a company and make hasty remarks that cause them to miss rare opportunities! JMIA will soar for sure but patience is key here. Say what you want but those who hold this gem will be greatly rewarded!!!
Raphdaking profile picture
@GChambersMD It went from $2 to $69. Is that not parabolic?
What more are you dreaming for.
Jumia 🚀🚀🚀
Jumia 3 billion? Are you sure?
Wait, Amazon does first party sales too. Does Jumia?
Is this how you offload bags onto retail investors?

JMIA share price growth is completely driven by speculation. 

An e-commerce play that managed to have revenue decline during COVID? I don’t even know how that’s possible. 

The share price went 10x in the past year...at the same time that revenues declined.

And you claim that business will improve when the pandemic is over...what?!

“Amazon of Africa?” Give me a break. Africa is not like the US where markets and languages are the same. Also the company is run from Berlin.
kingRIG2.0 profile picture
@beefy jr classic pump & dump
@beefy jr i love the ignorance on this stock. They switched from 1P to 3P sales which explains a lot of it.
@chriswebb112 sure I keep hearing people say that as an excuse, but that hasn’t exactly worked out for them so far has it? 

Anyone can say that they are pivoting as a company, but until they actually show any positive results it’s only a fugazi.

Again, share price has gone 10x while now they have lower revenues and lower margins. AND during COVID, the greatest thing to happen to e-commerce since Amazon! If they can’t manage to deliver on their “new” business model now, and of course haven’t been able to for the past years, why do we have faith in their future?

Eventually fundamentals matter. Just because you say you are the Amazon of Africa doesn’t simply make it so.
Bright spot profile picture
This stock will be a winner.
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