Jumia Technologies AG rode a particularly smooth crest in the first quarter of 2019. The company became the first African company to successfully go public on the New York Stock Exchange. Its share price rose by 70 percent and its quarterly earnings gave investors something to look forward to.
That crest, however, has come crashing down and locked the African e-commerce giant’s reputation in a riptide.
Activist short seller Andrew Left, through his Citron Research, released a report claiming that Jumia misled investors as well as authorities before going public. In the report, Left states that Jumia falsified figures relating to active buyers and merchants on the platform.
Despite denying these allegations during the earnings call, Jumia is now facing securities class action lawsuits from a number of law firms.
On behalf of investors who lapped up Jumia stock (JMIA), Bragar Eagel & Squire, P.C has filed a class action lawsuit in the U.S District Court for the Southern District of New York. Global investor-rights law firm Rosen Law Firm has also filed a similar suit in order to recover damages for investors who acquired the company’s stock.
Gainey McKenna & Egleston is also calling on plaintiffs who acquired Jumia shares during the class period; April 12 to May 9 of 2019.
Generally, the complainants allege that Jumia overstated its merchants and customers. This then warped the numbers surrounding the company’s sales. Per AP News, there are also allegations that Jumia failed to sufficiently disclose related party transactions.
Furthermore, Jumia allegedly presented financial statements in contravention of the applicable accounting standards.
During the earnings call on Monday, Sacha Poignonnec, CEO of Jumia, maintained that he didn’t put stock in Mr. Left’s allegations in the Citron Research report.
“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,” he said, refusing to be drawn further into the matter.
It remains to be seen what the official Jumia Technologies stance will be regarding this matter.