By CultureBanx Team
- Jumia once valued at $3B, has now been knocked down to a market cap of $322M
- The Lagos-headquartered company has a presence in 11 countries and was Africa’s first unicorn
Jumia (JMIA -1.86%) wants to be known as the Amazon (AMZN -0.42%) or Alibaba (BABA +0.53%) of Africa after becoming the first major African tech company to go public in 2019 on the New York Stock Exchange and has since struggled. Shares of the company have continued to underperform, falling nearly 70% since its IPO, knocking its market cap down to $322 million. Experts question whether Africa is ready for the “Amazon-style” B2C e-commerce that Jumia operates.
Why This Matters: Jumia has been more about story than substance that appealed to Western investors. Even for a subset of Nigerians, shopping on Jumia offers convenience more than anything else, not a necessity. The Lagos-headquartered company has a presence in 11 countries and was Africa’s first unicorn. Jumia has been the dominant e-commerce player on the continent for more than a decade, though failing to result in profits for the company.
In the third quarter of 2022, Jumia clocked 9.4 million orders worth $66.6 million. But during the same period, the company posted an operational loss of $43.2 million. Its total active users grew by 3.5% year on year in that quarter, while the number of orders increased by nearly 11%. Investor appetite remains questionable considering the company’s persistent financial losses in its core markets.
For Jumia’s IPO it raised more than $760 million from marquee investors like Blakeney Management, Goldman Sachs, the MTN Group, and Rocket Internet. The company’s IPO price of $14.50 apiece has been slashed and now trades at around $4 per share.
Competition is also heating up across the continent with Amazon looking to gain traction in the region. The U.S. based company is still in the process of finalizing its expansion into South Africa and Nigeria, which had been slated for February and April 2023 respectively.
What’s Next: It wasn’t always gloom and doom for Africa’s former unicorn and they’ve made some strong partnership strides. UPS will take advantage of the 3,000 drop-off and pick-up points that Jumia has built across its markets in Africa, to ensure its users get their packages directly delivered to their front door. Digital trade will add $180 billion to Africa’s economy by 2025 according to UNDP, and such partnerships could become a significant part of Jumia’s strategy as more global companies look to make inroads into the continent.
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