Jumia’s Share Price Falls after Poor Revenues in Q2 2024

Jumia’s share price falls from 53.82% to $4.89 on Tuesday, after the Africa-based e-commerce brand posted Q2 financial results that disappointed investors.

The firm provides e-commerce and delivery services much like Amazon (NASDAQ:AMZN) does in the U.S. 

Jumia’s Share Price Falls

In the second quarter of 2024, Jumia Technologies reported revenue of $36.5 million, down 17% year over year but up 15% in constant currency.

A market rally in the last three weeks saw Jumia’s share price hit $13 and a market capitalization of over $1.3 billion, but those profits have quickly been wiped out.

Before the market opened on Thursday, Jumia was trading at $4.91, resulting in a market capitalisation of $496 million. 

Despite the revenue drop, Jumia saw improvements in active customers and repurchase rates, and remained focused on its strategic goals, including enhancing its consumer value proposition and expanding its logistics network.

Strategies To Mitigate The Fall Of Jumia’s Share Price

The company had planned to take advantage of July’s rally to sell new shares. If it sells shares at the current market price of $4.91, it could raise $98 million. 

CEO Dufay told TechCrunch, “The new funding will be used to expand our supply chain network, particularly by enhancing logistics to reach smaller cities and broadening our overall network.”

He noted the company’s 55% sequential decline in cash burn, to $8.7 million, driven by “disciplined cost management and reductions in finance costs”.

Also Read: Former Paystack Managers Unveil GoLemon, a Grocery Delivery Startup

Also, the company plans to issue and sell a large quantity of shares to mitigate the loss in revenue. This raises the question of whether Jumia Technologies might enact more share-dilutive capital-raising measures in the future.

That’s certainly not an encouraging prospect. After due consideration, it’s wise to let the market absorb all of this news — and probably continue selling Jumia stock over the next few days — before assessing this as a “good deal” and jumping into a trade.

Interested in reading more? Interact with us here: 

Facebook: Silicon Africa.
Instagram: Siliconafricatech.
Twitter: @siliconafrite