Viewpoint: What went wrong at Jumia, ‘Africa’s First Unicorn’?
In April 2019, as a team of senior executives at Jumia Technologies AG rang the ceremonial bell marking the start of trading during the company’s historic IPO at the New York Stock Exchange, an argument raged on traditional and social media platforms 10,00km away across the Atlantic: “Is Jumia an African company or not?”
While many dismissed the surprisingly heated argument as nothing more than an irrelevance amidst a historic event for African tech, that single question unknown to them, would turn out to be the central point of the post-mortem that was set to unfold following the IPO.
Within a few days of trading, Jumia’s stock price tanked as investors suddenly turned cold on the company’s growth and performance prospects. Citron Research openly accused Jumia of fraud and described its equity as “worthless.” From a peak price of $49,99, Jumia stocks fell off a cliff and the bottom dropped out as the share price fell below its IPO price of $14.50. Some disgruntled investors began filing class action lawsuits.
Photo courtesy of Jan Truter.