Jumia Technologies AG (NYSE: JMIA), an African e-commerce expert, announced robust sales growth in the second quarter. The news strengthened the company’s prices, but investors remain wary about the online retailer’s long-term prospects.
Jumia Technologies AG (JMIA) sales increased by more than 42% year on year to $57 million in the second quarter. The key growth drivers were a 25% YoY rise in the number of clients to 3.4 million and a 31% increase in the volume of payments processed to more than $74 million.
Payment volume growth that exceeds user growth may indicate that purchasers are eager to raise their spending on the platform.
However, investors are closely monitoring Jumia Technologies’ long-term potential. The truth is that, despite tremendous revenue growth, the retailer remains unprofitable. Furthermore, operating loss outpaced revenue in the second quarter, totaling more than $67 million, compared to $51 million in the same quarter last year.
As a result of its e-commerce business, the company is losing money. The gross margin barely covers the expenditures, leaving little opportunity for employee compensation. Jumia Technologies AG’s (JMIA) business strategy is hence unsustainable. Jumia Technologies’ current liquidity is $351 million, allowing her to continue spending money for the time being. However, the corporation should reorganize in the future quarters to drastically cut losses or enhance liquidity.
It should be noted that Jumia Technologies AG (JMIA) works in a vast, attractive, yet immature sector fraught with several economic dangers. Strong spending is directed at establishing supplier networks, marketing, and assuring payment security. The firm is looking for major brands to work with and has just joined the worldwide shipping provider UPS.
This collaboration gives Jumia Technologies AG (JMIA) access to UPS’s network of logistics solutions in 220 countries. The collaboration represents a quantum leap for the e-commerce professional and a powerful engine for growth.
JMIA is down -53.46% over the last year and up 37.16% over the last week in terms of performance. The stock price index is up 82.44% in one month and 86.35% in three months. In the last six months, it has returned -0.83%.