Grace Ashiru
Jumia’s ($JMIA) share price took a significant hit on Thursday, extending the decline that started on Tuesday after the company reported Q2 2024 revenues of $36.5 million, falling short of analyst expectations of $41.7 million. A recent market rally over the past three weeks had pushed Jumia’s share price to $13, boosting its market capitalization to over $1.3 billion. However, those gains have swiftly evaporated.
Ahead of Thursday’s market opening, Jumia’s stock was trading at $4.91, reducing its market capitalization to $496 million. This development casts doubt on the company’s plans to sell 20 million shares, as reported by TechCrunch on Tuesday. Jumia had intended to capitalize on July’s rally by issuing new shares. At the current price of $4.91, the company could raise $98 million from the sale.
Selling secondary shares would have significantly improved Jumia’s cash reserves, which currently stand at $92.8 million in cash and cash equivalents. In 2021, the company managed to raise $386 million following an unexpected surge in its share price, which soared to $49.
“The fresh capital will be allocated to expanding our supply chain network, with a particular focus on enhancing logistics to better serve smaller cities and broadening our overall network,” CEO Dufay explained in an interview with TechCrunch.
If additional funding is secured, it will be channeled into advancing technology and accelerating the company’s growth to achieve break-even more rapidly.
In the second quarter, the company managed to reduce its losses to $19 million by cutting advertising expenses and optimizing cash usage. However, active customer numbers remained unchanged, and the devaluation of currency in key markets such as Nigeria posed challenges for revenue growth.
Jumia has not yet responded to requests for comment.
