Buy Signal on Jumia Technologies (JMIA-US)
Jumia is a $1.15 bn market cap, that specialize in e-commerce and services across Africa, including a presence in major countries (Egypt, Nigeria, Marocco, South Africa…) that represents 70% of the continent GDP and 600mn potential customers.
The company is currently rebalancing its products offering, including a dilution of Phones & Electronics from 56% to 43% of the total GMV in Q3 (-41% yoy on this segment ), while meantime Food & on-demand Services GMV is growing at high speed (+37% yoy) and growth of digital services offered on the Jumia pay app reached +14%. This led to a GMV down by 28% in Q3-20, while the rebalancing ajustment is expected to last several more quarters.
Some significant adjustements to the cost structure coupled with geographical rationalization led to a rather sound reshaping of the company, designed to offer a strong operating leverage after mix-rebalancing issues are fixed.
Short term catalyst: rebalancing of the GMV (Growth Merchandise Value).
This signal looks mainly company specific.