E-commerce giant, Jumia, has disclosed that the lack of long term investors in e-commerce business in Nigeria and Africa at large, prompted its Initial Public Offering (IPO) on the New York Stock Exchange.
While lamenting that there are no investors in Nigeria and Africa who will invest and wait for long term returns on investment (RoI), Jumia Nigeria’s Chief Executive Officer (CEO), Juliet Anammah, said in the United States of America, the game is different.
According to Anammah, e-commerce platforms are not reputed to make a profit in the short term. She gave examples of Alibaba‘s investors whpo all waited for long term RoI.
The Jumia boss, however, did not rule out an African listing, saying that it may happen by 2022 when investors must have understood the dynamics of the industry.
As Nairametrics reported, the e-commerce giant officially announced its listing on the New York Stock Exchange. The company’s share reportedly soared by 75% during its Friday NYSE debut, even as it traded at $25.46 by close of business. This pegged the company’s valuation at $1.9 billion as at close of business, Friday.
Meanwhile, a U.S based online investment newsletter, Citron Research, alleged afterwards that Jumia‘s shares are worthless and that they had never “seen such an obvious fraud”. This caused Jumia‘s share price to decline by over 18%.
According to Citron, Jumia “fudged its numbers” ahead of filing documents for its listing in the US. Here are some of the allegations;
- Jumia’s largest shareholders MTN and Rocket Internet wanted to exit the company after it reported in 2018 that it had a year’s cash left.
- Jumia’s revenue declined from $145 million to $131 million while adjusted EBITDA loss went from $161 million to $150 million.
- It claimed Jumia had in 2018 presented an investment memorandum that had information that was grimmer than what is presented for its IPO in 2019. Thus alleging that some critical information that could have priced the stock lower was removed.
- Some of the material discrepancies it claimed Jumia reported include a rise in active consumer numbers from 2.1 million in October 2018 to 2.7 million by April 2-19. Suggesting that this could not have been true.
- It also claimed that active merchants moved from 43k to 53k between the same period as well.
- It further claimed that “the most disturbing disclosure that Jumia removed from its F-1 filing was that 41% of orders were returned, not delivered, or cancelled. This was previously disclosed in the Company’s October 2018 confidential investor presentation.”
- Thus implying that most of its orders were cancelled in 2018.
- The report also accused Jumia of corporate fraud and related party infractions.