It’s a sign that traders are still processing the information and trying to decide whether they like Jumia now or not.
Really, the same thing could be said about the past year, as JMIA stock traders pushed the share price up high but then retraced around half of that rally.
It can all be frustrating for folks who want to make a decision on Jumia. So, let’s analyze the stock and company, and see if we can find reasons to lean bullish on this fascinating African e-commerce company.
JMIA Stock at a Glance
As recently as November of 2020, JMIA stock was trading at around $13. After that, though, the bulls really took charge and moved the share price much higher.
In fact, the stock managed to touch a 52-week high of $69.89 in February of 2021. That run-up was too much, too fast and gravity inevitably started to set in.
By May 20, the JMIA stock price had declined all the way down to $27.78.
It’s a tough pill to swallow if you bought near the top, but a promising opportunity if you’re prepared to take a long position today.
A Clear Path
According to Jumia Co-founder and Co-CEO Sacha Poignonnec, the company was established in 2012 with the vision of connecting consumers and sellers and make commerce easier in Africa.
An important change happened three years ago, however, as Jumia “decided to set the business on a clear path toward profitability.”
The idea here is to choose profitability as a priority over just scaling the business up as fast as possible. It’s a choice that makes sense from a long-term growth perspective.
So, is Jumia making headway in its pursuit of profitability? Poignonnec cited a number of signs indicating Jumia’s progress:
- The penetration of JumiaPay increased to 26% of gross merchandise value (GMV), and 37% of orders
- Six consecutive quarters of positive gross profit after fulfillment
- For five consecutive quarters, reduced adjusted EBITDA loss in absolute terms year-over-year
- $570 million in net proceeds raised over the past six months, suggesting a strengthened balance sheet
With that in mind, Poignonnec expects Jumia’s total loss for 2021 to be lower than 2020’s loss.
That’s a step in the right direction, particularly considering that the world is still recovering from the Covid-19 pandemic.
A More Complete Platform
Without a doubt, there’s positive data to reflect on from Jumia’s first quarter of 2021.
For one thing, the company’s quarterly gross profit increased by 11% on a year-over-year basis. Even better, Jumia’s gross profit after fulfillment expense improved year-over-year by a whopping 149%.
We talked about narrowing the losses as a step on the path to overall profitability. In that vein, Jumia’s first-quarter 2021 adjusted EBITDA loss decreased year-over-year by 24%.
And it’s not just about people buying products online – it’s also about how they made the purchases.
Significantly, 36.7% of Jumia’s orders in the first quarter of 2021 were completed using JumiaPay.
The point here is that Jumia is making progress in the payments and fintech segment. And with that, the company is becoming a more complete e-commerce platform.
As Jumia Co-founder and Co-CEO Jeremy Hodara explains, JumiaPay is now functioning “as a financial service marketplace for both consumers and sellers.”
It’s a smart move for Jumia to go in this direction. Fintech is an essential part of e-commerce, and Jumia is working diligently to make payments easier for shoppers.
JMIA Stock: The Takeaway
Jumia is an e-commerce giant in the making, even if not all traders recognize this.
And as the company makes progress towards profitability, JMIA stock holders should stay in the trade for the long term.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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