Jumia’s Resurgence: E-commerce Startups Sees its Stock Soar as it Reclaims its $1bn Valuation.

Jumia, Africa’s pioneering e-commerce platform, has experienced a remarkable resurgence in its stock price, surging 55% over the past five days. This rally has lifted the company’s market value to $1.32 billion, signalling renewed confidence among investors as Jumia works to reposition itself for future growth.

Founded in 2012, Jumia was celebrated as Africa’s first unicorn in 2016 after raising $200m, achieving a valuation of over $1 billion as it revolutionised online shopping on the continent. The company initially thrived by offering a wide range of products, from electronics to fashion, and quickly expanded its operations across multiple African countries. 

In April 2019, Jumia made headlines by becoming the first African tech company to list on the New York Stock Exchange, a move seen as a significant milestone for Africa’s tech ecosystem.

However, the initial excitement soon gave way to challenges. During the meme stock rally, Jumia’s stock peaked at an astonishing $62.4 in February 2021, but the company struggled to maintain its momentum. 

A series of operational difficulties, including high costs, a lack of profitability, and challenges in scaling its business model, led to a steep decline in its share price. 

By late 2022, Jumia had lost over 70% of its market value, prompting the board to take drastic measures.

In response to the company’s struggles, Jumia’s board made the difficult decision to fire its long-time co-CEOs, Jeremy Hodara and Sacha Poignonnec, in late 2022. 

The leadership shakeup aimed to inject new energy into the company and address the operational inefficiencies that had plagued Jumia. Francis Dufay, a former management consultant and CEO of Jumia Ivory Coast, was appointed as the new CEO.

Under Dufay’s leadership, Jumia implemented significant restructuring measures over the past 18 months. The company laid off 43% of its workforce, scaled back operations in underperforming markets, and shuttered its food delivery service. 

Additionally, the management team based in the United Arab Emirates was downsized, with many members returning to work from Jumia’s offices on the continent. These changes were part of a broader strategy to streamline operations and reduce costs.

The restructuring efforts have begun to yield positive results. By the end of the first quarter of 2024, Jumia reported a remarkable 71% reduction in operating losses, a significant achievement for a company that has never made a profit.

 Despite facing rapid currency devaluation and macroeconomic challenges in key markets, particularly Nigeria—which accounts for over a third of Jumia’s annual sales—the company saw its revenue grow by 18.5%. Furthermore, salary and administrative expenses decreased by 37% compared to the same period the previous year.

The shift in strategy towards third-party sellers has also contributed to Jumia’s recovery. In the first quarter of 2024, third-party merchants accounted for over 52% of sales on the platform, allowing Jumia to reduce its direct sales from its inventory. 

This transition has proven beneficial, as Jumia earned $17.3 million in commissions from merchants during the same period, a 78% increase from the $9.7 million earned in the previous year.