JMIA Stock Looks Risky Here, but It’s a Long-Term Risk Worth Taking

InvestorPlace2021-05-21

JMIA stock has lost a lot of value but is building its foundation as a Pan-African eCommerce juggernaut Pan-African eCommerce giant Jumia (NYSE:JMIA) has a wild ride at the stock market in the past ...

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Comments

Fior
2021-06-23
Fior
Like and comment[真香]
iamateh
2021-06-16
iamateh
Worth the long wait. the potential is huge! pls like and comment
3ox
2021-06-07
3ox
Long term investment
aaffsmcjje
2021-06-04
aaffsmcjje
Time to short
Walking_sky
2021-05-25
Walking_sky
Good
天橋上的大爺
2021-05-24
天橋上的大爺
Pls like and comment
- iamateh:
  hi

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JMIA stock shot up by more than 1500% from its pandemic lows earlier this year. However, in the past three months, it lost roughly 60% of its value.\nThe reason is simple: its financials do not justify its lofty market capitalization of over $2.5 billion. Though that is true for now, the market is ignoring the business’ positioning and its incredible long-term potential.\nJumia is a company in transition. It has shifted its business model towards third-party marketplace sales, which has heavily impacted its near-term growth. Moreover, it aims to be less reliant on one-off sales such as in electronics towards higher-frequency product categories such as clothing, food, and others.\nAdditionally, higher-order frequency items will positively impact the penetration of its fintech offering called JumiaPay. It has also implemented several cost control measures and exited less profitable markets such as Cameroon.\nThis being said, let’s look at Jumia in a little more depth and assess whether it’s a good investment now at this time.\nA Look at JMIA’s Financials\nIt’s safe to that Jumia’s fundamentals aren’t impressive for its massive total addressable market and its meteoric valuation.\nRevenues in the past year declined by 12.9% though marketplace revenues grew by 19.6%. Moreover, its gross merchandise volume (GMV) was down by a considerable 19% for the full year. The trend has followed in its first-quarter results this year, where its GMV was down 13% and its sales dropped 6% on a year-over-year basis.\nThe drop in revenues is linked to its transition in its business model, which I discussed earlier. However, an area where it is excelling is its gross margins.\nGross margins rose by 22.3% last year compared to 2019, reaching positive territory after fulfillment expenses. Moreover, the trend followed in the first quarter this year, where gross profits reached €6.2 million, more than doubling year-over-year.\nThe number of active users on its platform continues to rise at a healthy rate,experiencing a 12% growth in the past year compared to 2019.\nAdditionally, the order volume on its platform increased by 5.1% in 2020 compared to 2019. It also increased by 3.3% in the first quarter this year; therefore, it appears that the company is slowly building towards a recovery in its top line.\nMarket Opportunity\nJumia operates in the fast-growing African market, which has the potential of becoming global growth’s new frontier.\nThe company operates in 11 countries with 600 million people, which accounts for roughly 70% of Africa’s internet users.\nMcKinsey estimates that the African eCommerce industry will account for approximately 10% of the continent’s retail sales by 2025, whichtotals $75 billion in revenues annually.\nHence, it is clear that Jumia has penetrated a small portion of the market so far, and even if it ends up a fraction of its TAM, it could rapidly expand its market capitalization.\nIn this regard, JMIA stock is fairly priced despite the weakness in its fundamentals. Analysts estimate suggest that it is trading at an 8% discount at this time.\nBottom Line on JMIA Stock\nJMIA stock has been on a roller-coaster ride in the past few months. It’s a company in transition, but it appears to be playing its cards right in capturing a meaningful portion of the African eCommerce business.\nHowever, it needs to speed up its top-line growth in the next few quarters to ensure the relevancy of its narrative.\nIn many ways, though, the pull-back presents an excellent opportunity to invest in the stock, which could have a massive growth runway ahead.","kind":"news","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":123236067,"gmtCreate":1624424077059,"gmtModify":1703836262175,"author":{"id":"3579818815924112","authorId":"3579818815924112","name":"Fior","avatar":"https://static.tigerbbs.com/5abc82f7fc805d7694c80f6d8f37c87d","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3579818815924112","authorIdStr":"3579818815924112"},"htmlText":"Like and comment[真香]&nbsp;","listText":"Like and comment[真香]&nbsp;","text":"Like and comment[真香]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/123236067","repostId":1175695362,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":160867767,"gmtCreate":1623781809959,"gmtModify":1703819326038,"author":{"id":"3554804006357295","authorId":"3554804006357295","name":"iamateh","avatar":"https://static.tigerbbs.com/cfa6492594e288f70d24f72146aeec45","vip":1,"crmLevel":6,"crmLevelSwitch":0,"idStr":"3554804006357295","authorIdStr":"3554804006357295"},"htmlText":"Worth the long wait. the potential is huge! pls like and comment","listText":"Worth the long wait. the potential is huge! pls like and comment","text":"Worth the long wait. the potential is huge! pls like and comment","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/160867767","repostId":1175695362,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":115412626,"gmtCreate":1623026814065,"gmtModify":1704194471642,"author":{"id":"3577531997673531","authorId":"3577531997673531","name":"3ox","avatar":"https://static.tigerbbs.com/f0340340cf207115c944bbe9fcb8e1f0","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3577531997673531","authorIdStr":"3577531997673531"},"htmlText":"Long term investment&nbsp;","listText":"Long term investment&nbsp;","text":"Long term investment","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/115412626","repostId":1175695362,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":116953155,"gmtCreate":1622770974177,"gmtModify":1704190837477,"author":{"id":"3557887424829909","authorId":"3557887424829909","name":"aaffsmcjje","avatar":"https://static.tigerbbs.com/0fcb01cf792998a6ce47337ae22c20b9","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3557887424829909","authorIdStr":"3557887424829909"},"htmlText":"Time to short","listText":"Time to short","text":"Time to short","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/116953155","repostId":1175695362,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":138554698,"gmtCreate":1621950883714,"gmtModify":1704365029790,"author":{"id":"3575097808659600","authorId":"3575097808659600","name":"Walking_sky","avatar":"https://static.tigerbbs.com/d59df1f61eb096fb0254b08caa39a764","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"3575097808659600","authorIdStr":"3575097808659600"},"htmlText":"Good","listText":"Good","text":"Good","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/138554698","repostId":1175695362,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":133712163,"gmtCreate":1621811126952,"gmtModify":1704362492383,"author":{"id":"3581796785124701","authorId":"3581796785124701","name":"天橋上的大爺","avatar":"https://static.tigerbbs.com/74a9b70d7f2658b4a438eda788611bf6","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"3581796785124701","authorIdStr":"3581796785124701"},"htmlText":"Pls like and comment&nbsp;","listText":"Pls like and comment&nbsp;","text":"Pls like and comment","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/133712163","repostId":1175695362,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4788964,"gmtCreate":1623781836278,"gmtModify":1663228933946,"authorId":3554804006357295,"author":{"id":3554804006357295,"idStr":"3554804006357295","authorId":3554804006357295,"name":"iamateh","avatar":"https://static.tigerbbs.com/cfa6492594e288f70d24f72146aeec45","vip":1,"crmLevel":6,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":133712163,"type":1,"supId":0,"prevId":0,"content":"<u>hi</u>","text":"<u>hi</u>","html":"<u>hi</u>"}],"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":255,"commentSize":51,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.4","shortVersion":"4.29.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1175695362"}