By Dipo Olowookere
Shares of Africa-focused e-commerce platform, Jumia, depreciated on Friday a day after a short seller, Citron Research, accused the company of lying to investors.
In the report obtained by Business Post, Citron accused Jumia of inflating its active customer and active merchant numbers by 20 to 30 percent, and that 41 percent of its deliveries were either returned, not delivered or cancelled.
“The most disturbing disclosure that Jumia removed from its F-1 filing was that 41% of orders were returned, not delivered, or cancelled. This was previously disclosed in the Company’s October 2018 confidential investor presentation. This number is so alarming that is screams fraudulent activities,” the report said.
As a result of this claim by Citron on Thursday, Jumia, which started trading its stocks on the New York Stock Exchange (NYSE) in early April, dropped 24.5 percent to trade at $20.30 per unit.
Citron said in its 18 years of publishing, it “has never seen such an obvious fraud as Jumia. As the media in the US is naively anointing Jumia the ‘Amazon of Africa’, the media in its home country of Nigeria has a plethora of articles discussing the widespread fraud in this Nigerian company. Not even that elusive Nigerian prince can cover this one up.
“Jumia is the worst abuse of the IPO system since the Chinese RTO fraud boom almost a decade ago. Worse than being ‘the most expensive’ US listed e-commerce company, Jumia reported financials show us a stagnant business that has burned through $1 billion and has moved the suckers game to the US Markets.”
Since its establishment in 2012, Jumia has suffered losses of about $1 billion in total including $195.2 million on revenue of $149.6 million last year.
Meanwhile, e-commerce rivals whose backers weren’t willing to sink hundreds of millions into achieving scale, have downsized, shut down or pivoted into other businesses, particularly in Nigeria.
The company says it has a lot of room to grow, with 400 million internet users in the 14 countries in which it currently operates. But critics point to a severe lack of disposable income in poor countries like Nigeria, where roughly half of household spending goes toward food.
Citron, founded by Mr Andrew Left, is known for issuing damning reports on companies in which it has taken a short position.
The company gained notoriety after targeting pharmaceutical company Valeant, which saw its stock price crumble after fears over its accounting practices and heavy debt load.
