Jumia’s Share Price Falls 28% Following Weak 2024 Performance

Shares of African e-commerce company Jumia took a sharp dive on Friday, with Jumia’s share price falling 28% in a single day. The stock dropped from $3.88 to $2.82, wiping out a significant chunk of its market value, which now stands at $285.2 million, far below the $1.3 billion it was worth in the third quarter of 2024. This steep decline follows the company’s disappointing financial performance in 2024, raising concerns among investors about its future.

Jumia’s struggles were evident in its 2024 revenue numbers, which fell by 10% to $167.5 million. The fourth quarter of the year was particularly challenging, with revenue dropping by 23% year-over-year to $45.7 million. While some of Jumia’s internal metrics show progress, such as improved customer loyalty and order growth, the company’s overall performance has been overshadowed by its inability to turn a profit and its vulnerability to macroeconomic challenges.

One of the key reasons behind Jumia’s share price fall is its exposure to currency devaluations in major markets like Nigeria and Egypt. These two countries are critical for Jumia’s business, but their unstable currencies have negatively impacted the company’s dollar-denominated earnings.

For instance, Jumia’s gross merchandise value (GMV), the total value of goods sold on its platform, dropped by 4% in 2024 to $720 million and plunged by 12% in the fourth quarter alone. This decline was partly due to weaker currencies in these regions, making it harder for Jumia to maintain growth in U.S. dollar terms.

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

Adding to investor concerns is Jumia’s rising cost structure. Despite efforts to improve efficiency, the company’s logistics expenses increased by 11% year-over-year in 2024, highlighting ongoing challenges with its infrastructure. In an environment where global investors are favoring profitable, cash-generating businesses due to higher interest rates, Jumia’s continued losses make it less attractive as an investment option.

For context, a Goldman Sachs index tracking unprofitable tech companies dropped 20% last year, while the broader S&P 500 gained value—a trend that reflects how investors are losing patience with companies that fail to deliver profits.

Another factor contributing to Jumia’s share price fall is its shrinking customer base. The company reported 8.3 million active customers in 2024, down from 10 million the previous year. However, there is a silver lining: customers who do stick with Jumia are becoming more loyal, with a repurchase rate rising to 40%. Additionally, orders grew by 11% in the fourth quarter of 2024 to reach 7.4 million, showing that some areas of the business are still gaining traction.

Jumia has also been expanding into smaller cities across Africa, which now account for over half (56%) of its orders. While this expansion has helped grow order volume, it has also led to more low-value transactions, further pressuring its GMV figures. At the same time, high-margin corporate sales in Egypt have declined, adding another layer of complexity to the company’s revenue challenges.

Looking ahead, Jumia is projecting GMV growth of 10–15% for 2025, aiming for a range of $795–830 million. However, this forecast assumes stable currency conditions—an assumption many investors might find overly optimistic given Africa’s ongoing economic headwinds and Jumia’s recent track record of underperformance.

For now, Jumia faces an uphill battle to regain investor confidence. Until it can stabilize its dollar-denominated growth, reduce losses, and chart a clear path to profitability, skepticism around its business model is likely to persist. Friday’s sharp drop in Jumia’s share price may just be a reflection of deeper concerns about whether the company can overcome these challenges.

Jumia’s share price fall highlights broader issues facing tech companies operating in volatile markets like Africa. While there is potential for long-term growth in e-commerce across the continent, the road ahead for Jumia remains uncertain as it grapples with economic pressures and operational inefficiencies. For now, investors appear cautious about betting on a turnaround story that has yet to materialize fully.

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