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Jumia Stock Plunges 41.22 Percent on 91 Percent Jump in Operating Loss

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Jumia - Investors King

In the last one month, the price of Jumia’s stock has dropped by 41.22 percent on growing uncertainty surrounding the future of Africa’s leading eCommerce company shortly after the release of its third-quarter report in November 2021.

The price of Jumia stock dropped by $7.89 or 41.22 percent in the past month to $11.25, suggesting a broad-based selloff amid weak investors’ confidence in a stock that rose to $65.51 per share on Wednesday 10 February 2020 when global investors thought it would replicate the performance of the likes of Amazon and other eCommerce companies that thrived on COVID-19.

This is in spite of the company growing orders by 28 percent to an all-time high of 8.5 million in the third quarter. Even active consumers and Gross Merchandise Volume (GMV) rose 8 percent year-on-year each to 7.3 million and $238 million, respectively.

Still, global investors are not buying into the numbers. In fact, Luke Holbrook, a Morgan Stanley equity research analyst, lowered the bank’s recommendation for Jumia’s stock to underweight from neutral, according to a report by The Motley Fool. Holbrook then advised shareholders to sell their shares at $11 and move on. Indicating he does not have confidence in the company going forward.

Stifel Nicolaus, the only analyst that seems to be positive on Jumia, suggested ‘hold’ with a profit target of $18. Meaning, he is also not sticking his neck out for the once flying stock to hit $65, its COVID-19 peak.

Here is Why Investors Are Abandoning Jumia Stock

Jumia sales and advertising expenses jumped by a shocking 228 percent to $24 million year-on-year but active consumers and GMV only grew by 8.1 percent each. While the 28 percent increase in orders was because the company decided to sell more of everyday consumer items as opposed to its usual higher-value items like electronics. As of the third quarter, the average volume of Jumia sales was $28, down from $41.50 in 2019.

Also, Jumia customers are not returning to the website as much as Amazon and other global eCommerce platforms’ customers. Indicating that customers in Nigeria and other Jumia’s operating nations in Africa are not buying from the website as expected.

Chris Lau, a contributing author at InvestorPlace, put it best, “Jumia will have to spend more on its operations going forward. It needs to bring the right products to its customers. To do so, it must work with its suppliers and sellers. and add international brands to its marketplace, increasing its costs.”

And finally, Jumia operating loss increased by 91.4 percent to $64 million.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Stock Market

Stock Market Opens The Week in Red

The Nigerian Exchange Limited (NGX) opened the week in the red on Monday as just 10 stocks appreciated amid growing uncertainty surrounding the Nigerian economy.

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The Nigerian Exchange Limited (NGX) opened the week in the red on Monday as just 10 stocks appreciated amid growing uncertainty surrounding the Nigerian economy.

Investors transacted 140,610,346 shares valued at N1.6 billion exchanged in 3,895 deals during the trading hours of Monday. Japaul Gold led the most traded equities with 23,180,182 shares worth N8,951,218.33. AIICO came second with 14,848,501 shares valued at N8,448,727.89.

A critical look into each sector showed that the banking index gained 60bps on the back of a 7.07% gain in the value of Ecobank. Jaiz Bank and UBA shed 1.14% and 0.69%, respectively.

The consumer goods index dipped by 29 on a 6.25% decline in Champion, 4.76% depreciation Intbrew and 4.75% Honey Flour.

Also, the oil and gas index lost 27bps on a 1.80% decline in the worth of Oando shares. As expected, 9.06% depreciation in the value of Dangote Cement plunged the industry index by 483bps.

The NGX All-share index lost 2.26% to 49,350.71 index points while the market value of all listed equities dropped by N740 billion to N26.618 trillion from N27.358 trillion.

The year-on-year gain moderated by 15.53%.  See other details of top gainers and losers below.

Top Gainers 

Symbols Last Close Current Change %Change
PRESTIGE N 0.40 N 0.44 0.04 10.00 %
NEM N 3.40 N 3.74 0.34 10.00 %
ELLAHLAKES N 3.58 N 3.93 0.35 9.78 %
MULTIVERSE N 1.88 N 2.06 0.18 9.57 %
IKEJAHOTEL N 0.97 N 1.06 0.09 9.28 %

Top Losers

Symbols Last Close Current Change %Change
CORNERST N 0.75 N 0.68 -0.07 -9.33 %
DANGCEM N 265.00 N 241.00 -24.00 -9.06 %
JAPAULGOLD N 0.37 N 0.34 -0.03 -8.11 %
SOVRENINS N 0.27 N 0.25 -0.02 -7.41 %
STANBIC N 31.00 N 29.00 -2.00 -6.45 %

Top Trades

Symbols Volume Value
JAPAULGOLD 23180182.00 8951218.33
AIICO 14848501.00 8448727.89
STERLNBANK 14301701.00 21410942.23
SOVRENINS 10110600.00 2578650.00
GTCO 7850003.00 160968657.15

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Cautious Post-Jobs Report

A relatively slow start to the week as investors continue to digest Friday’s jobs report and what it means for financial markets just as some optimism was returning.

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By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

A relatively slow start to the week as investors continue to digest Friday’s jobs report and what it means for financial markets just as some optimism was returning.

The report itself was strong almost across the board, with participation being the only outlier, but Fed officials will not have been quite so enthused which makes it a tough one for investors to get too excited about.

On the one hand, it strengthens the argument that the economy is not really experiencing a recession as the labour market is simply too strong. On the other, it’s also extremely tight and wages are continuing to rise at a fast rate which will make the task of fighting inflation that much harder.

With another 75 basis point rate hike next month now the favoured outcome, although a lot can change in that time, it could be a nervy couple of days for investors ahead of Wednesday’s inflation report. It turns out the shift to data-dependency isn’t all it was cracked up to be.

Another record Chinese trade surplus but also more lockdowns

It’s a relatively quiet day, and the economic calendar continues to look very thin. How traders continue to respond to Friday’s report will be key in how we start the week. Asia is off to a mildly positive start but it’s nothing to write home about.

Cities on the Chinese resort island of Hainan have been placed in lockdown following another Covid outbreak, reminding investors once more of the country’s commitment to its zero-Covid policy at all costs. At the same time, Hong Kong has sought to appease residents and the business community by cutting quarantine periods from seven days to three. While still very restrictive compared to much of the world at this point, it was a bolder move than anticipated and highlighted the pressure to return to normal life.

Chinese trade data highlighted the struggles of the domestic economy, with imports rising 2.3% annually last month while exports remained surprisingly strong up 18%, delivering another record trade surplus. The numbers aren’t expected to remain quite so favourable in the months ahead as reopening momentum fades, leaving the import numbers a concern.

Iran talks resume as oil makes small gains

Oil prices are a little higher today, recovering from the lows on Friday. The jobs report highlighted how strong the economy remains although traders are now increasingly nervous about more aggressive tightening sending the economy into a deeper recession further down the road. It really is a lose-lose.

The resumption of Iran nuclear talks today is one potential downside risk for the oil price, given the ability of the country to quickly ramp up production if a deal is struck. Not to mention its reportedly large oil and gas reserves. A deal could apparently be struck within days although we have heard that a lot at times this year.

Gold nervously eyeing inflation data

Gold is flat today after Friday’s jobs report took the wind out of its sails. The recovery trade was being fueled by the belief that data-dependency meant a slower pace of tightening but that’s now clearly not the case (nor was it ever, in fairness). We may see some nervy trading in the yellow metal ahead of Wednesday’s inflation report although it still seems to have an eye on $1,780-1,800 which is the next major test to the upside.

A swift recovery

Sentiment across the markets looks a little fragile this morning and yet crypto appears to have shrugged off Friday’s shock much more quickly. Up more than 3% this morning and climbing once more with its sights set on $25,000 it seems. The momentum indicators will be fascinating here as the recovery appeared to be losing steam during the last ascent in late July.

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Nigerian Exchange Limited

Stock Investors Pockets N195 Billion Last Week

Nigeria’s stock investors gained N195 billion last week despite the drop in activity level at the Nigerian Exchange Limited (NGX).

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Nigeria’s stock investors gained N195 billion last week despite the drop in activity level at the Nigerian Exchange Limited (NGX).

Investors traded 705.636 million shares worth N12.850 billion in 22,124 deals during the week under review, in contrast to a total of 1.546 billion shares valued at N16.289 billion that exchanged hands in 23,873 deals in the previous week.

Breaking down key sectors, the Financial Services Industry led the activity chart with 442.525 million shares valued at N4.345 billion traded in 9,995 deals. Therefore, contributing 62.71% and 33.81% to the total equity turnover volume and value, respectively.

The Consumer Goods Industry followed with 82.126 million shares worth N2.176 billion in 3,875 deals. In third place was the Conglomerates Industry, with a turnover of 51.083 million shares worth N242.084 million in 694 deals.

Guaranty Trust Holding Company Plc, Zenith Bank Plc and FBN Holdings Plc were the three most traded equities last week. The three accounted for a combined 173.852 million shares worth N3.073 billion that were traded in 4,324 deals during the week. The three contributed 24.64% and 23.91% to the total equity turnover volume and value, respectively.

The NGX All-Share Index appreciated by 0.70%, or 352.08 index points from 50,370.25 index points it closed in the previous week to 50,722.33 index points last week.

The market capitalisation gained N195 billion to N27.358 trillion last week, up from N27.358 trillion it settled in the previous week.

Similarly, all other indices finished higher with the exception of The NGX-Main Board, NGX NGX Insurance, NGX Industrial Goods and NGX Sovereign Bond Indices which depreciated by 1.16%, 0.37%, 5.76% and 0.07% while, The NGX ASeM index closed flat.

Forty- one equities appreciated in price during the week, higher than eleven in the previous week. Twenty-two equities depreciated in price lower than fifty-three in the previous week, while ninety three equities remained unchanged higher than ninety-two equities recorded in the previous week.

The year-to-date gain tick slightly higher to 18.74%. See other details below.

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