Jumia Shares Drop to $13.47 as GMV Drops by 13% in Q2 2020
Despite some noticeable improvements in Jumia’s second-quarter financial results, investors that jumped on the company’s stock prior to its financial statements release pulled back as the Gross Merchandise Value (GMV) declined by 13 percent even with COVID-19 lockdown.
In the financial statement released by Jumia last week, the company’s operating loss reduce for the first time in six quarters. While revenue declined by 10 percent when compared with the second quarter of 2019 to €34.9 million, better than the 18.7 percent predicted by experts.
Accordingly, the company’s operating losses declined by 44 percent year-on-year to €37.6 million. This is largely due to the company’s new strategy of cutting down costs both in the advertisement and other aspects of the organisation to the lowest levels since 2017.
Also, profit on fulfillment expense rose to €6 million during the quarter, up from €0.7 million decline posted in the same quarter of 2019 and indicated that Jumia is no longer making losses on fulfilling orders.
Jumia GMV declined by 13 percent year-on-year to €228 million in the quarter under review, one of the main reasons investors held back on the stock.
GMV measures the value of goods sold on the platform at a specified period.
Prior to the release, investors had increased their holding of jump shares, saying the company would have recorded substantial sales like its other global e-commerce counterparts due to COVID-19 lockdown that forced most to shop behind the computer.
But the success recorded on JumiaPay during the quarter held few investors back. For instance, the company processed 2.3 million transactions valued at $39 million in the first quarter. This number rose to 2.4 million transactions worth €53.6 million in the second quarter, representing a 106 percent increase.
In general, buyers placed 35.6 percent of their total orders using JumiaPay. Suggesting that JumiaPay is growing among Jumia customers and outside the platform. Also, the company recorded a triple-digit growth for orders above €10.
However, despite reporting lower revenues, the company was able to cut losses and increased gross profit by reducing advertisement costs.
“We have made significant progress on our path to profitability in the second quarter of 2020, with Operating loss decreasing 44% year-over-year to €37.6 million. This was achieved thanks to an all-time high Gross Profit after Fulfillment expense of €6.0 million and record levels of marketing efficiency with Sales & Advertising expense decreasing by 51% year-over-year,” commented Jeremy Hodara and Sacha Poignonnec, Co-Chief Executive Officers of Jumia.
“We are navigating these uncertain times of COVID-19 pandemic with strong financial discipline and operational agility which positions us to emerge from this crisis stronger and even more relevant to our consumers, sellers and communities.”
The price of Jumia shares declined from $20.50 per share it traded on August 10, 2020 to $13.47 on Monday as at 1:00 am Nigerian time.
TikTok Seeks $60 Billion Valuation as Oracle, Walmart Take Stakes
China’s ByteDance Ltd. is seeking a valuation of $60 billion for TikTok as Oracle Corp. and Walmart Inc. take stakes in the short-video app’s business to address U.S. security concerns, according to a person familiar with the matter.
Oracle and Walmart have rights to buy 12.5% and 7.5% respectively of a newly established TikTok Global under an agreement that won the approval of President Donald Trump, the person said, asking not to be named discussing private negotiations. The two companies would pay a combined $12 billion for their stakes if they agree to that asking price.
The final valuation price had not been set as the parties worked out the equity structure and measures for data security, the person said. Terms are still in flux and the proposed valuation could still change.
ByteDance was pressured into a deal for TikTok when Trump threatened to ban the app in the U.S. over national security concerns. After Microsoft Corp. made a proposal for a full buyout of the service, ByteDance instead turned to Oracle’s offering in which the Chinese parent will maintain a solid majority stake.
“I approved the deal in concept,” Trump told reporters Saturday as he left the White House for a campaign rally in Fayetteville, North Carolina. “If they get it done, that’s great. If they don’t, that’s OK too.”
ByteDance and Oracle representatives didn’t immediately respond to requests for comment.
ByteDance may end up owning as much as 80% of TikTok Global, which would include the app’s operations in the U.S. and the rest of the world excluding China. Venture firms, including Sequoia Capital and General Atlantic, may also acquire equity in the new business.
Under the current proposal, there will be five seats on the board of TikTok Global. Walmart’s Chief Executive Officer Doug McMillon will become a director, the retailer said in a statement.
Oracle has given reassurances that it can protect TikTok user data from foreign influence.
“Oracle will quickly deploy, rapidly scale, and operate TikTok systems in the Oracle Cloud,” said Oracle CEO Safra Catz in a statement. “We are a 100% confident in our ability to deliver a highly secure environment to TikTok and ensure data privacy to TikTok’s American users.”
The company will get full access to review TikTok’s source code and updates to make sure there are no back doors used by the company’s Chinese parent to gather data or to spy on the video-sharing app’s 100 million American users, according to people familiar with the matter.
Facebook to Open Office in Lagos, Nigeria
Social Media Giant Facebook Will Open a New Office in Nigeria
Facebook Inc, the world’s biggest social media company, on Friday announced it will open a new office in Lagos, Nigeria. The second of such in Africa.
According to the company, the office will be home to various facebook teams, servicing the African continent in Sales, Partnerships, Policy, Communications as well as Engineers.
The new office is expected to be operational in the second half of 2021 and will be the first in Africa to house a team of expert engineers building for the future of Africa and beyond.
Speaking on the new office, Ime Archibong, Facebook’s Head of New Product Experimentation, said: “The opening of our new office in Lagos, Nigeria presents new and exciting opportunities in digital innovations to be developed from the continent and taken to the rest of the world. All across Africa we’re seeing immense talent in the tech ecosystem, and I’m proud that with the upcoming opening of our new office, we’ll be building products for the future of Africa, and the rest of the world, with Africans at the helm. We look forward to contributing further to the African tech ecosystem.”
The investment of the new Facebook office follows the 2018 opening of NG_Hub, its first flagship community hub space in Africa in partnership with CcHub, and the 2019 opening of a Small Business Group (SBG) Operations Centre in Lagos, in partnership with Teleperformance. Providing outsourced support to all English-speaking advertisers across Sub-Saharan Africa, the SBG office supports Small Medium Businesses (SMBs) through its Advocacy, Community & Education (ACE) programme, as well as its Marketing Expert sales programmes – all aimed at enabling SMBs to accelerate the growth and development of their businesses.
“Our new office in Nigeria presents an important milestone which further reinforces our ongoing commitment to the region”, commented Kojo Boakye, Facebook’s Director of Public Policy, Africa. “Our mission in Africa is no different to elsewhere in the world – to build community and bring the world closer together, and I’m excited about the possibilities that this will create, not just in Nigeria, but across Africa.”
Since the opening of its first office in 2015, Facebook has made a number of investments across the continent, aimed at supporting and growing the tech ecosystem, expanding and providing reliable connectivity infrastructures and helping businesses to grow locally, regionally and globally. This includes the recent rollout of its SMB Grants programme in Nigeria and South Africa, aimed at supporting over 900 businesses by providing a combination of cash and ad credits to help small businesses as they rebuild from COVID. The development of 2Africa, the world’s largest subsea cable project that will deliver much needed internet capacity and reliability across large parts of Africa, as well as its ongoing training programmes across the continent which support various communities including students, SMBs, digital creatives, female entrepreneurs, start-up’s and developers.
Nunu Ntshingila, Regional Director, Facebook Africa, said: “We’re delighted to be announcing our new office in Nigeria. Five years on from opening our first office on the continent in Johannesburg, South Africa, we’re continuing to invest in and support local talent, as well as the various communities that use our platforms. The office in Lagos will also be key in helping to expand how we service our clients across the continent.”
Senator Rubio Urges Trump to Scrap TikTok-Oracle Deal if ByteDance Ties Remain
Marco Rubio and five other Republican senators called on the Trump administration to reject a proposed deal for Oracle Corp ORCL.N to become a “trusted technology provider” for popular social media platform TikTok’s U.S. operations, if ties to Chinese owner ByteDance remain.
Rubio, the first senator to call on the administration to investigate TikTok over censorship concerns, said in the letter to President Donald Trump that “serious questions” remained about Oracle’s role, the technology it would provide to ByteDance, and the future of the application’s algorithm.
“We remain opposed to any deal that would allow China-based or controlled entities to retain, control or modify the code or algorithms that operate any U.S.-based version of TikTok,” Rubio wrote in the letter, dated Wednesday.
“We are heartened that this deal still requires government approval, and if reports indicating this proposed deal will retain links to ByteDance or other Chinese-controlled entities, we strongly urge the administration to reject such a proposal on national security grounds,” he added.
Late on Wednesday, Senator Ted Cruz raised concerns about a deal, saying in a separate letter the Oracle ByteDance deal “failed to meet the intent of the president’s executive orders” and “raises serious national security concerns.”
The Trump administration will make a decision soon on Oracle becoming a trusted technology provider, White House press secretary Kayleigh McEnany said on Wednesday.
The Rubio letter, also signed by Senators Thom Tillis, Rick Scott, John Cornyn, Roger Wicker and Dan Sullivan, is part of a growing chorus of lawmakers raising questions about the deal.
On Monday, Republican Senator Josh Hawley sent a letter to Treasury Secretary Steve Mnuchin, who heads a national security panel reviewing the proposal, calling for the deal to be scuttled, if it does not allow for the “full emancipation of TikTok software from potential Chinese Communist Part control.”
It is unclear what Trump will do. White House adviser Jared Kushner on Tuesday said the White House is reviewing Oracle’s bid and a senior administration official said a decision had not yet been made.
Trump had previously made clear he sought a full-scale sale of the app to an American technology company, amid concerns among national security officials that ByteDance could provide American user data to the Chinese government. But Trump may not want to alienate 100 million-odd American TikTok users weeks before a hotly contested presidential election.
Trump has also said he is a fan of Oracle’s co-founder and Chairman Larry Ellison, one of few tech executives to openly support the Republican president.
Meanwhile, China has updated its export control rules to give it a say over the transfer of technology, such as TikTok’s recommendation algorithm, to a foreign buyer. Chinese officials have said ByteDance should not be coerced by the United States into a deal.
Oracle announced on Monday it was part of a proposal submitted by ByteDance to the U.S. Treasury Department to serve as “trusted technology provider,” to ByteDance, providing no further details on the terms of the deal.
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