Online retailer Jumia Technologies AG (JMIA) is active in the African market, leading investors to have a conflicting attitude towards it. On the one side, all over the world, e-Commerce is booming. However on the other hand, poorly developed infrastructure in Africa and relatively low local population incomes are slowing down the company’s growth.
Jumia Technologies announced a decline in revenue and gross volume of goods sold on the platform in the third quarter. The decline in revenue is due to changes in the business model of the company, but only low customer activity can justify the drop in gross sales. Jumia Technologies has however, increased its gross profit and decreased operating losses. The online retailer’s stock lost almost 20 percent after the announcement of the quarter’s results.
Subsequently, Jumia Technologies received some positive feedback from Wall Street. Specifically, Citron Research experts indicated that the shares of the company could cross the $100 mark. Also, analysts at Short Hills Capital Partners expect the shares of the retailer to increase. To reignite the Jumia Technologies rally, these statements were enough.
At the same time, it is worth noting that Jumia Technologies faces a range of difficulties, unlike other e-commerce firms. There are many potentially promising companies in the sector, including digital payments and logistics, but the African infrastructure lags behind other parts of the world, making it difficult for e-Commerce. Thus, investments in Jumia Technology remain risky due to geographical characteristics, despite operating in a promising sector. Strong price growth in 2020, at the same time, could attract some long-term investors.
Jumia Technologies AG (JMIA) stock was down -2.00 percent to $36.29 at close of the session on Tuesday. Market capitalization of the company currently stands at $2.92 billion while it has added 439.23 percent to its value since start of the year.