Full DD on Jumia Stock | JMIA Stock Analysis

Jumia. The one and only Amazon of Africa. Is JMIA stock still a buy today? This African e-commerce company connects sellers with consumers, and enables the shipment & delivery of packages from sellers to consumers. The company also owns a payment service division called JumiaPay, which facilitates transactions between people and businesses. Last time I made a video on this company, I highlighted some temporary sluggish fundamentals. My conclusions were that things were improving, but a slower pace than I would have hoped for. As you’ll see from today, it’s a similar story with this quarter’s earnings. Although their most recent quarter’s results missed the mark, there have been notable improvements in the financials of this company. For a bit of context, Jumia had a rough 2020 and experienced some significant revenue declines within certain quarters. On that front, last quarter, revenue was up Year over Year by 4.6%. Gross profit increased at a similar rate to revenues, by 4.4% YOY to around 26.8 million dollars, with gross profit margins reaching 66.7%. Additionally the number of e commerce orders increased by 13% year over year, reaching their fastest growth rate in the past 5 quarters. Active customers also increased by 3% during the quarter. JumiaPay Transactions increased by 12% which was the fastest transactions growth rate of the past 4 quarters due to accelerating volume growth in the food delivery category in particular. Overall, the company is experiencing a slower growth rate than I personally would have preferred to see. But still, growth is growth. In 2020, Jumia introduced JumiaPay and JumiaGames. This year, they launched a new segment focusing on providing shipping & delivery services for corporate clients & small businesses directly. With their expertise, Jumia is uniquely positioned within the African market to provide services to business clients. With they newly launched logistics-as-a-service, they experienced very strong momentum with a record 1.3 million packages delivered in the second quarter of 2021 compared to half a million packages in the full year 2020. Some of the clients for the logistics-as-a-service segment include UNICEF and various banks. I’m a big fan of this new initiative because it represents yet another revenue stream for the company. Thanks to new partnerships with the JumiaPay division, they also created new applications such as allowing customers to recharge their highway toll fees from the JumiaPay app directly.  Another very important metric to look at is gross merchandise value (or “GMV”). GMV reflects the total sum of the value of every single order for products and services on their platform. During Q2, GMV which declined by 11% to $223.5 million as many consumers shifted habit towards buying lower value items such as groceries. This translated to an average order price decline from $37.10 for Q2 of 2020 to $29.30 for this year’s second quarter. In 2020, Jumia saw declines in GMV in every single quarter except Q4.  This may seem bearish at a first glance. But despite declines in GMV being the trend, Jumia managed to bring in a 4% growth in revenues. If we look back to last year, 2020 was a monumental year for Jumia,  as they shifted their revenue business model from a first-party to a third-party revenues in order to become more profitable in the future. The company shifted away from clunky sales like electronics, to more everyday type consumables product sales like food, cosmetics and clothing… a positive by-product of this transition is that they will be selling products that have more buying frequencies than things like electronics, thus revenue will start coming in on a more frequent and predictable. However, it may be many years before its strategy pays off.