How To Buy Jumia Stock

Jumia Stock

Jumia Stock

Jumia Technologies (NYSE:JMIA) is aiming to become Africa’s de facto online marketplace and digital payments provider, which sounds like an incredible opportunity. Indeed, it could be a worthwhile long-term investment of time. However, Jumia is still a money-losing machine for the time being.

On May 11, 2021, it released its first-quarter earnings results. The company lost 33.7 million euros ($41.1 million) in the first quarter. Although this is a significant improvement over its operating loss of 43.7 million euros in the first quarter of 2020, it is still significant.

Despite these ongoing losses, there are some reasons to be optimistic about Jumia.

Why I Should Buy Jumia Stock

To begin with, successful investors must be able to recognize patterns. Some of the most successful investments over the years have been companies that set out to do what Jumia is attempting to do. In North America, Amazon has increased by over 160,000% since its initial public offering. And there’s MercadoLibre in South America, which has risen nearly 5,000 percent since going public. Even if Jumia achieves a fraction of the success that these companies have, it still has tremendous upside potential given its market capitalization of less than $3 billion.

But perhaps the most compelling reason to take a closer look at Jumia stock is because of one of the most important global trends that few people are talking about. Over the next 30 years, Africa’s population is expected to double, the fastest growth rate on the planet. Nigeria (one of Jumia’s core markets) will have a population larger than the United States by 2050 if current trends continue.

In a nutshell, Jumia is dedicated to bringing e-commerce and digital payments to one of the world’s fastest-growing and underserved regions. This alone makes it a fascinating prospect.

Furthermore, Jumia’s approach to this could be very scalable. The company has recently shifted its focus away from first-party sales. Rather, it’s concentrating on improving the infrastructure and logistics that enable e-commerce. As more African consumers and businesses embrace the digital-commerce trend, Jumia may be the only company ready to help them make the transition.

Where To Buy Jumia Stock

If you are looking for how to buy Jumia stock, you can buy Jumia stock from the following brokers:

1. Etoro

You can buy JUMIA and other stocks on eToro for ZERO commission! You can also get the latest information on Jumia Technologies AG’s stock price on etoro.

2. Stash

On Stash, you can buy Jumia Technologies AG (JMIA) stock as well as a variety of other stocks and ETFs. Any dollar amount can be used to purchase fractional shares.

Jumia Stock Obstacles To Overcome

Inventory management and shipping logistics are being worked on by Jumia. This infrastructure development is costly, but it is necessary. So, for the time being, we can give the company a partial pass on its ongoing operating losses. Growth in sales volume, customers, and payment volume is more important at the moment. These three things are indicators of Jumia’s platform’s adoption.

Jumia is expanding in all three areas but at a slow pace. Its active customer base increased by 12% year over year in 2020, while gross merchandise volume (GMV) decreased by 19%. The drop in GMV was, however, due to a 46 percent drop in first-party sales, which was planned. Due to a 35 percent drop in first-party sales, GMV was down 13% in the first quarter compared to the same quarter in 2020. However, active customers increased by 7% in the first quarter. According to these two reports, third-party sales and new customers are increasing, but at a slow pace.

On the surface, JumiaPay’s payment volume growth appears to be much better. Total payment volume (TPV) increased by 58 percent in 2020 compared to 2019. In the first quarter, TPV increased by 35%. However, this is significant progress from a low base. In the first quarter, TPV was only 43 million euros. For context, MercadoLibre’s Mercado Pago had a first-quarter TPV of $14.7 billion, up 82 percent year over year — much better growth from a much higher starting point.

To summarize, Jumia is well-positioned to capitalize on the world’s growing population. However, adoption has yet to reach a tipping point. As a result, when purchasing Jumia stock, today’s investors will need to exercise extreme patience. It will take time to see if it pays off.

Conclusion

Jumia is not a stock I intend to buy at this time. I’d like to learn more about this company before investing, even if it means jumping on the bandwagon a little late. After all, if Africa’s digital opportunity is as large as some claim, I can be late to the party and still profit handsomely in the long run.

I’m looking for an increase in GMV, new customers, and TPV growth rates in particular. Also, keep in mind that JumiaPay isn’t currently being monetized. If the company’s management lays out a monetization strategy, I’ll think twice about buying stock.

However, if someone wanted to buy Jumia stock today, I would recommend starting with a small position in a diversified portfolio and understanding that this is a riskier investment. I would also buy with a five-year minimum holding period to give the company time to reach a growth inflection point.

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