• 13 hours How Blockchain Tech Could Make Mergers And Acquisitions More Efficient
  • 18 hours America’s Shortage Of This Metal Keeps Trump Up At Night
  • 1 day Bidet Bonanza: Defying The Toilet Paper Shortage
  • 2 days U.S. Auto Sales Fall By 75%
  • 2 days Violating Quarantine? Big Brother Is Watching
  • 3 days Does Gold Still Have Some Room To Run?
  • 3 days Major Acquisition Gives The World’s First Green Ride-Share Another Edge
  • 3 days U.S. Pushes For Digital Currency For Immediate Stimulus
  • 4 days The Impossible Challenges Created By Growing Population
  • 4 days Gold Skyrockets After Fed Pledges "Unlimited" Cash To Boost Economy
  • 4 days World’s Richest Lose $1 Trillion In Stock Market Rout
  • 5 days Gas Stations Shut Down In Venezuela As Coronavirus Crisis Intensifies
  • 5 days The Best And Worse Case Scenario For The U.S. Stock Market
  • 5 days 3 Industries Soaring During The Coronavirus Crisis
  • 6 days The Key To Commercial Hydrogen
  • 6 days Gold Still Beating Much Of The Market Despite Sell-Off
  • 7 days Gold Miners Struggle With COVID-19 Fallout
  • 8 days The Dollar Reigns Supreme In Times Of Crisis
  • 8 days The Most Exciting Green Startups To Watch In 2020
  • 8 days 5 Ways To Beat The Coronavirus Quarantine Doldrums
Airbnb IPO Under Threat As China's Economy Drags

Airbnb IPO Under Threat As China's Economy Drags

The coronavirus outbreak in China could derail…

U.S. Regulators Take Aim At Foreign Investments

U.S. Regulators Take Aim At Foreign Investments

The Trump administration and US…

  1. Home
  2. Investing
  3. Other

Africa’s First Unicorn IPO Is Coming To The NYSE

Tech

Africa’s biggest e-commerce startup, Jumia Technologies, is set to list on the New York Stock Exchange in April, ending months of speculation. The online retailer plans to offer 13.5 million American depositary shares with a price range of $13-$16--though the final price will be set after the company’s planned investor roadshow. The upper end of that range gives Jumia a valuation of $1.2 billion, thus making it Africa’s first unicorn to list on an American exchange.

The company has also received a cash injection of $56 through million private placement from MasterCard Europe. This means that MasterCard will purchase shares worth that much at whatever price the market will give it. This gives the young company a confidence boost ahead of an uncertain listing.

Jumia will trade under the ticker symbol ‘JMIA.’

Who is Jumia?

Launched in 2012 in Nigeria by the Africa Internet Group (AIG), Jumia has fashioned itself as the “leading pan-African e-commerce platform.”  

According to SEC filings, the company operates in 14 countries representing 72 percent of the continent’s GDP estimated at $2.2 trillion.

Jumia is a vertically integrated company that provides a marketplace for a wide variety of goods, payment services, logistics, and delivery options.

The company is more than a mere e-commerce company, operating its own online payment platform (JumiaPay) and also provides logistical services via Jumia Logistics including its own last-mile fleet of delivery vehicles.

Like many startups, Jumia’s top line is growing at an admirable clip whereas the company has not yet figured a way to turn a profit. According to its updated S1 documents, Jumia recorded net revenue of 130.6 million Euro in 2018, a healthy 38.9 percent Y/Y growth. However, its losses continued widening, from 165.4 million Euro in 2017 to 170.4 million Euro in 2018. It’s adjusted profitability metrics are not too good either, with adjusted EBITDA clocking in at -150.1 million Euro in 2018 from -126.8 million Euro in 2017.

Related: Gold Mining Stocks Are Soaring

As of the end of 2018, Jumia had accumulated losses of close to a billion dollars and had a negative operating cash flow of $159.2 million.

IPOs losing money

Jumia is in good company, though.

Amazon consistently lost money during its first few years as a public company, and would still be operating on razor thin margins if it were not for its hugely profitable cloud business, AWS.

Is the lack of profitability likely to deter investors? Jumia seems to be having little trouble raising funds. According to CrunchBase Data, the company has held four rounds of funding and managed to raise $767.7 million.

But if the Lyft IPO is any indication, then Jumia could be in for a rough ride.

The ride-hailing company had a pretty good IPO, with the shares soaring 20 percent on its Friday IPO. Yet, the shares reversed, giving up nearly all their gains on Monday’s trading session. Experts are warning that unlike in the past, the market is now punishing money-losing companies.

Just like Jumia, Lyft’s losses have been widening, with the company booking a $900 million loss last year. In fact, IPOs this year have not been faring very well with many losing money shortly after going public. That’s a sharp reversal from the past years whereby shares of unprofitable unicorns that IPOd have performed better than profitable ones.

(Click to enlarge)

Source: Recode

By Alex Kimani for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment