Jumia Technologies Drops After Q4 Results

Shares of Jumia Technologies (JMIA) were sliding in afternoon trading after the company reported quarterly results. Following the report, an analyst from Raymond James downgraded the stock.

WHAT'S NEW: Before the market open, Jumia reported a fourth-quarter operating loss of (EUR61.113M), down from (EUR52.949M) in the same period last year, and fourth-quarter revenue of EUR49.276M, up from EUR43.28M last year. Meanwhile, annual active consumers increased 54% year-over-year to 6.1M in Q4, while orders rose 49% to 8.3M and GMV fell 3% to EUR301M.

WHAT'S NOTABLE: In the same report, the company noted that its sales practices review, which it launched in Q2 of 2019, has now been completed. "In late 2019, we identified a small number of improper orders, mostly placed in the second quarter of 2019, in addition to the improper orders disclosed in our report on second-quarter results," the company said. "In aggregate, the improper orders identified generated less than 3% of our GMV in 2018, concentrated in the fourth quarter of 2018, and less than 2% of our GMV in 2019. Remedial measures have been taken. We have also implemented measures designed to prevent similar conduct in the future and, more broadly, to strengthen our internal controls and corporate governance. As part of our normal business, we continually take steps to strengthen our control environment and enhance our transaction monitoring procedures."

STREET RESEARCH: Following the "mixed" results, Raymond James analyst Aaron Kessler downgraded the stock to Market Perform from Outperform. Kessler said he thinks Jumia is taking the right steps in rebalancing its business mix towards higher frequency consumer purchase items but also sees it taking time for this strategy to drive stronger GMV growth. While the analyst also believes EBITDA should improve going forward, it will take time to meaningfully improve EBITDA loss rates. Kessler added that, given his expectations for lowered growth and continued high near-term losses, he believes the shares lack a near-term catalyst.

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Disclosure: None.

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