When I first saw the headline, I knew that I had to at least throw a little money at it. Jumia Technologies is up HUGE since their IPO just four days ago. What caught my attention was the term “the Amazon of Africa.” Combining the top E-commerce platform in the world with the projected fastest growing population calls for a hype-fest if I have ever seen one. Will the good times keep rolling for this company or will it fall back down to Earth?
At the end of 2018, Jumia had 4 million active users with revenue of $149.6 million, a 40% increase from the year prior. However, it lost $195 million. Many investors will attribute to the Amazon growth model and will afford this company sizable losses for years to come, just as they did Amazon. They do have significant logistical issues to solve. Founded in 2012, this company is poised to take on big expectations. Currently, the stock is trading at $47.07, quickly approaching a $4 billion market cap.
Many potential investors itching to get in on the gains are probably asking themselves if they should buy. That is a difficult question to answer. In recent years we have seen multiple bubbles in emerging industries, notably cryptocurrency and marijuana. Those that caught the wave early rode it to riches. Those that bought late, not so much. Timing is everything, especially in these crazy times in finance.