Investors around the market are recoiling after news began to proliferate that Jumia, the African e-commerce giant that was set to disrupt online retail, will be delaying its IPO. While the company was originally slated to go public on April 11th, according to filings made with the SEC, it pushed its market debut one day later to the 12th, in order to give it more time to release more accurate numbers.
The company wanted to give investors a day to digest the new financial information that they’re releasing, which could impact how its market debut ultimately pans out. While we still don’t know much about Jumia’s IPO thanks to this delay, here’s everything we do know about the budding African e-commerce giant and how it may perform in the open market.
Jumia is truly massive
Not many Westerners will be familiar with Jumia (NYSE: JMIA), yet the African e-commerce giant is truly massive and set to enjoy a regional sector that’s bound for growth in the foreseeable future. The company is rumored to be a unicorn, meaning investors expect its IPO to potentially value it at more than $1 billion, yet it remains to be seen what investors are thinking about the African company ahead of its market debut. What we do know about its internal finances are mostly gleaned from financial filings made with the SEC ahead of its IPO.
According to S-1 filings, for instance, Jumia is setting a rough share price of $13 to $16 and plans to offer some 13.5 million American depositary shares that could generate as much as $200 million during its market debut. The company’s recent decision to delay its IPO could ultimately impact those figures, however, and quite a bit of swirling mystery will doubtlessly surround Jumia until it releases official pricing information and actually goes public. The company is hoping to ride the wave of customer growth that it’s been enjoying since last year, as literally, millions of new consumers across the African content are budding into financial maturity that enables them to enjoy online shopping.
Customer numbers for Jumia spiked by about 48% last year, for instance, up to an impressive 4 million in total. This demonstrates that Jumia is no small fish in the e-commerce market, but rather that the company is a legitimate pioneer in the industry and has a serious opportunity to lord over the African sector for years to come. With Africa being the world’s youngest continent, it stands to reason that investors with their eyes on the long-term future of e-commerce will find a bid in Jumia to be an intriguing long-term proposition.
Jumia won’t be drowned out by Uber
One of the reasons that Jumia may have moved its IPO was to avoid debuting at the same time as the colossal Uber (NYSE:UBER), which has been generating huge investor interest in its IPO thanks to its huge cultural sway and disruption of Western transportation markets, including auto insurance. While representatives of Jumia told Quartz Africa that the company was delaying its IPO in an effort to give investors more time to ingest financial details they may find relevant to their purchasing decision, it stands to reason that Jumia avoiding Uber’s massive shadow could help bolster the company’s profitability when it hits the market.
Rather than paying attention to Uber, however, investors are likely going to focus on Africa’s burgeoning e-commerce market, which Jumia hopes to pioneer by steering the continent’s young consumers towards digital goods and services at affordable prices. An analysis of African e-commerce found that it will soon be worth $75 billion at least, and there are few reasons to believe that this impressive growth is going to slow down anytime soon.
The German-based Jumia still isn’t profitable and reported losses of roughly 170 million euros in 2018. Its collective losses of 862 million euros since inception could serve as a deterrent to investors, too, with most shareholders banking on the fact that future growth across African e-commerce platforms will make up for its existing debts. We may not know how investors will treat Jumia until its delayed IPO occurs, but it’s beyond any doubt that the budding African e-commerce giant is one of the most watched companies for African investing right now.