Tech News
Jumia sees competition from startups in growing African e-commerce market
Investors have experienced a couple of twists and turn since the stock debuted in New York.
One of Africa’s leading e-commerce firms, Jumia Technologies AG, is facing a new set of competition from startups in the Africa e-commerce and logistics market, after the coronavirus pandemic increased the demand for online deliveries.
The Co-Chief Executive Officer of Jumia, Sacha Poignonnec revealed that the restrictions and lockdown, which were implemented by various countries as part of measures to contain the spread of the coronavirus, have attracted more entrepreneurs into the e-commerce business. He, however, demonstrated good sportsmanship, saying:
“Greater competition is to be welcomed, given there are still so few people in the region that transact online. I would rather grow the market than just try to take everything.’’
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Nairametrics had reported that Jumia reported a loss after tax of 37.6 million euros (N17 billion) in the second quarter of 2020. E-commerce firms were expected to be one of the major beneficiaries of the coronavirus pandemic as consumers, during the lockdown, moved towards online transactions to meet their essential needs.
However, the losses were an improvement on the 66.7 million euros that was reported for the corresponding period in 2019. Apparently, the firm is trying to dig itself out of a massive loss hole.
The Lagos-based online market place, which is listed on the New York Stock Exchange, was one of the pioneers of internet trading in sub-Saharan Africa. Unfortunately, the company’s performance falls behind that of its peers around the world due to various challenges ranging from poor internet connection to now competition.
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Jumia investors have experienced a couple of twists and turns since the stock debuted in New York last year. Allegations of corruption, persistent losses in the Nigerian business and a damning short-seller report contributed to an initial share-price slump. But the coronavirus outbreak has helped to greatly increase market value this year.
It was reported earlier that one of the early investors in Jumia, MTN Group Ltd, was considering selling its stake in the business. Reacting to this, Poignonnec disclosed that Jumia may offer MTN’s shares as part of a potential new equity offer within the next 3 years if the Johannesburg-based firm decides to sell.
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He also revealed that expanding into food delivery business has helped to increase Jumia’s sales and footprint in its African markets, which are led by Nigeria. This includes grocery and pharmacy orders as well as restaurants takeaways.
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The logistics business unit of Jumai is another revenue stream as it is also now open to third parties who wish to use the firm’s network of drivers to deliver packages.
Financial Services
PayPal post its strongest Q1, with net profits of $1.10 billion
PayPal currently has 392 million active accounts with net profit in Q1 rising to $1.10 billion.
The fintech juggernaut posted impressive growth in its revenues in Q1 bolstered by the growing usage of the digital economy. PayPal stated it had revenues of $6.03 billion in Q1 and earnings per share of $1.22, which outperformed market analysts’ forecast of $1.01.
Altogether PayPal currently has 392 million active accounts with net profit in Q1 rising to $1.10 billion from $84 million a year earlier.
The company is riding high taking into consideration that online shopping hit a record high spurred by COVID-19, though some market pundits argue that such could change as the pandemic eased. Still, PayPal’s stellar performance does not look likely to succumb to that prediction anytime soon.
Highlights of PayPal Q1 earning results
- Earnings per share: $1.22, adjusted, vs. $1.01 per share expected in a Refinitiv survey of analysts.
- Revenue: $6.03 billion vs. $5.90 billion expected by Refinitiv.
- Total payment volume: $285 billion vs. $265 billion expected in a FactSet survey.
“Our strong first-quarter results demonstrate sustained momentum in our business as the world shifts into the digital economy,” said CEO Dan Schulman in a statement.
The company’s impressive performance was also reflected in the addition of 14.5 million new active accounts, with 1.5 million new merchant accounts included, bringing the total merchant accounts to 31 million globally.
“Our record-breaking first quarter results underscore the ongoing strength, diversification, and relevance of our scaled, two-sided, global payments platform. We are raising our FY’21 guidance based on these strong results.” John Rainey the CFO added.
Consequently, Paypal has upgraded its service offerings with the option of the ability for splitting up purchases and paying them off for a period of time as well as the ability to purchase and sell, Bitcoin, Ethereum, Litecoin, Bitcoin Cash.
Recent price actions reveal PayPal rose as high as $259.55 in extended New York trading after the announcement was made thereby posting gains of 4.65%.
Business News
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