Jumia, the leading e-commerce platform in Africa, has seen its market surpass $1.33 billion. This milestone comes as Wall Street analysts and investors express renewed confidence in the company’s growth potential.
Jumia’s share price closed trading at $12.08 on Friday, compared to $8.46 on July 8, lifting its market value to $1.32 billion. The recent uptick in Jumia’s stock price reflects growing optimism about its ability to capitalize on the expanding e-commerce market in Africa.
The rally marks a notable shift in fortunes for the company, which has experienced a rollercoaster ride as a publicly traded company since its debut on the New York Stock Exchange in April 2019. Although Jumia’s share price skyrocketed to an all-time high of $62.4 in February 2021 amid the meme stock frenzy, it has since shed over 70% of its market value. This decline comes as the company’s board and management team work diligently to orchestrate a turnaround.
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After a string of poor performances, the company took the drastic decision to fire its long-time co-CEOs, Jeremy Hodara and Sachs Poignonnec, in late 2022, and appointed Francis Dufay who previously held the CEO role at one of Jumia’s top markets, Ivory Coast, to run the company.
Under the previous management, Jumia never turned a profitable quarter since it went public in 2019 despite the former co-CEOs consistently mentioning how the company was intentional about its path to profitability during quarterly calls. After battling several fraud allegations, public relations crises, and increasing losses in back-to-back quarterly reports, investors’ confidence waned in Jumia’s ability to become a profitable business.
The new CEO Dufay inherited a struggling business that was no longer growing, putting it at risk of running out of money. Under Dufay’s leadership, he focused on reducing Jumia’s operating losses and setting the company on a clear path to profitability.
He implemented several cuts across the company, including laying off 900 or 20% of employees. He also reined in some profligacy, including forcing 60% of Jumia’s top management team to work from the African continent instead of an office in the United Arab Emirates to save costs. The cuts also hit executive compensation.
So far, Dufay’s changes seem to be working. Jumia’s operating losses were down 60% in 2023, year, especially advertising spend, which declined 71.7%, compared to 2022.
In May 2023, Jumia saw its losses decline, and met its end-of-the-year target in its first quarter (Q1) report for 2023, following the implementation of strategy from new management. Reports revealed that the e-commerce platform reached the lowest losses in four years after the new management Jettisoned the blueprint of the previous management.
These changes have no doubt made an impact on the company. At the end of Q1 2024, the company, which has never turned a profit, reduced its operating losses by 71%.
Also, its revenue grew by 18.5% despite rapid currency devaluation and macroeconomic problems in its key markets, especially Nigeria, which represents more than a third of its annual sales. The company also posted a 19% revenue growth year-on-year in Q1 2024 to $49 million, despite a 5% decline in active customer base in the same quarter.
Its quarterly active customers group declined from 2 million to 1.9 million due to cost-cutting measures such as reduced customer incentives and free shipping expenditures. However, this helped the company to retain a higher-quality customer base with increased repurchase rates.
Jumia Group’s CEO, Francis Dufay, believes the company is off to a great start this year as it continues to execute strategic priorities focused on strengthening Jumia’s core business and improving cash efficiency while establishing a leaner organization primed for growth.
As Jumia continues to execute its strategic initiatives and expand its footprint across the African continent, market watchers remain bullish on the company’s long-term prospects. The rise in market cap underscores the increasing recognition of Jumia’s potential to drive significant value in the rapidly evolving e-commerce landscape in Africa.