African e-commerce giant Jumia releases post-IPO results amid securities fraud allegations

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After going public on the New York Stock Exchange last month (April 2019), African e-commerce giant Jumia (JMIA) has released the results of its financial performance for Q1 2019.

However, this news comes against a murky backdrop of allegations by short seller Andrew Left of Citron Research.

Despite starting off strong after the bell – Jumia stock grew by 70 percent on a $14.50 per share offering – the company’s stock tripped over accusations of filing false documents with the Securities Exchange Commission in March in the run-up to the IPO. The stock dropped 26 percent in the wake of the report.

The earnings results, therefore, come at an opportune time to try and remedy the losses being incurred due to what Jumia executives believe are false accusations.

Q1 earnings

In the first quarter of 2019, Jumia posted operating losses of $51million up from $38.4 million with $44.3 million in negative earnings before interest, tax and depreciation up from $33.8 million.

Despite the fact that Jumia is still hemorrhaging money, there are some figures that will prop up the hopes of investors. The e-commerce company’s Gross Merchandise Value (GMV) rose by a significant 58 percent to $270 million. The GMV is the total worth of goods moved over the platform during the quarter.

Citibank Frontier Markets Analyst Andrew Howell, speaking to TechCrunch, was of the opinion that GMV was not the be all end all but was a starting point to generate revenue.

“The side that was less encouraging was the expenses are still very high,” he continued.

In other positive reading for investors, however, Jumia more than doubled its marketplace revenue growth to $17.9 million.

Fraud allegations

Activist short seller Andrew Left through his Citron Research published a report on May 9 that claimed that there were discrepancies in some of the paperwork that Jumia filed with the SEC in the run-up to the IPO.

Andrew Left, Executive Editor Citron Research

Left’s report claims that there is a difference in the number of active customers and merchants when one compares the contents of an October 2018 Jumia investor presentation and the SEC Form F-1 the company filed in April 2019.

The difference? 600,000 active customers and 10,000 merchants.

During the earnings call on Monday, Jumia CEO Sacha Poignonnec refuted the contents of the Citron report, labeling them as market rumors instead of facts.

He said, “Jumia stands by our prospectus and audited financials and will not be distracted by those who look to create doubt, to profit at our expense and that of our long-term stakeholders.”

Interestingly, Left does hold short positions in Jumia stock – putting him in prime position for a good payday if the stock continues on its downward trajectory.

Moving forward

These accusations complete a rocky first quarter of 2019, coming on the heels of several assertions from the general public that Jumia isn’t truly as African as it claims.

However, the company – with operations in 14 African states – brushed these off. There are also plans in the works to expand operations to Ethiopia, Angola and DR Congo in the coming years. The company is also toying with the idea of partnering its in-house payment tool JumiaPay with MasterCard in a deal worth around $56 million.

The JMIA stock also rebounded by close of business on Monday, rising by 5 percent. With the books open now that the company is public, it only remains to be seen how Jumia will cope with the accusations. Mr. Poignonnec said that legal recourse against Citron might not be out of the question.

After going public on the New York Stock Exchange last month (April 2019), African e-commerce giant Jumia (JMIA) has released the results of its financial performance for Q1 2019. However, this news comes against a murky backdrop of allegations by short seller Andrew Left of Citron Research. Despite starting off strong after the bell – Jumia stock grew by 70 percent on a $14.50 per share offering – the company’s stock tripped over accusations of filing false documents with the Securities Exchange Commission in March in the run-up to the IPO. The stock dropped 26 percent in the wake of the report. The earnings results, therefore, come at an opportune time to try and remedy the losses being incurred due to what Jumia executives believe are false accusations. Q1 earnings In the first quarter of 2019, Jumia posted operating losses of $51million up from $38.4 million with $44.3 million in negative earnings before interest, tax and depreciation up from $33.8 millio... }

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