Weeks after releasing its Q3 results, Jumia is experiencing another market rally. Weeks before its results were released, its first stock market rally began, with share prices reaching $17.
At the time, the short-seller, Andrew Left, who once called Jumia a fraudulent company publicly changed his outlook on the company’s shares. He said he was now buying Jumia stock and taking a long position of $50.
At the time of writing this, JMIA is now trading at $30. That is the highest price it has traded since its IPO.
Why is everyone so excited about Jumia?
There are a couple of theories. Some investors are happy about the launch of new features and products like Jumia Games
“Investors are cheering this news because it appears Jumia is following a game plan that's straight out of the playbooks of successful e-commerce leaders from around the globe. Just last year, it launched a subscription service similar to Amazon Prime called Jumia Prime in select markets.”
Another theory is that the company’s Q3 results provide some important context to how Jumia’s focus as a company. While it started out focusing on a lot of phone sales and giving huge discounts on phones and other tech products, it is now focusing on groceries and household items.
It has cut costs by cutting its spend on big ticket ads it used to do for phone brands and is now making more revenue from the third parties that sell on the platform. By focusing on becoming a platform for third parties, Jumia collects commission and becomes more efficient.
In the end, it looks altogether possible for Jumia to become profitable soon. For now, today’s winners are those who bought Jumia stock when it was trading at $3.98. How’s that for a big return?