Why Jumia Technologies Stock Soared Today
Jumia reported a decline in revenue, but sales of physical goods grew.
The company said it would be profitable by 2027.
Jumia has faced a number of challenges, but profitability would be a major accomplishment.
10 stocks we like better than Jumia Technologies Ag ›
Shares of Jumia Technologies (NYSE: JMIA) were surging today after the African e-commerce company reported solid growth in orders, despite a decline in revenue, and guided to full-year profitability in 2027.
The stock's gains seemed to come not because the overall results were strong, but because after years of challenges, Jumia appears to be at an inflection point, especially as the company had never before given profitability guidance.
As of 2:07 p.m. ET, the stock was up 24% on the report.
Jumia's revenue declined 26%, or 18% in constant currency, to $36.3 million, though that includes the impact of exiting Tunisia and South Africa. Gross merchandise volume (GMV) was down 11%, or 2% in constant currency, to $161.7 million.
However, orders for physical goods were up 21% in the quarter, its fastest growth rate in two years, and active customers ordering physical goods rose 15%. In Nigeria, the company delivered strong results, with orders up 22% and GMV up 20%.
On the bottom line, Jumia's losses continued, with an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $15.7 million.
For 2025, Jumia expects physical goods orders to grow 20%-25%, up from a prior range of 15%-20%, and it sees GMV up 10%-15% to $795 million-$830 million in the year. Management also reaffirmed its commitment to delivering profitable growth for the year.
After experimenting with different businesses such as fintech and food delivery, Jumia seems to be settling into a conventional e-commerce business: shipping physical goods.
Having given its 2027 profit guidance, Jumia now needs to hit it, or the stock could crumble. If it can get there, however, and do it with solid growth, there is a lot of upside potential for the company, as Africa is a huge market. Nonetheless, the company's struggles thus far should give investors some caution.
Before you buy stock in Jumia Technologies Ag, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Jumia Technologies Ag wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $623,103!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $717,471!*
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why Jumia Technologies Stock Soared Today was originally published by The Motley Fool
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