Just recently, Jumia was being celebrated as the first “African Unicorn” when it listed on the New York Stock Exchange on the 12th of April this year.
It came with a lot of jubilant expectations and prospects of attracting other investors to Africa.
This has not been without some negativities like the fact that maybe Jumia wasn’t really an African company since it was founded by two Frenchmen and incorporated in Germany.
However a new report from Citron research is now claiming that Jumia is a fraud and that its equity is worthless.
According to the report, “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 ecommerce 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.”
The report claims it has obtained a copy of Jumia’s confidential investor presentation from October 2018 that was being used to market to investors late last year and is is NOT what they told the SEC.
“We will present some of many MATERIAL DISCREPANCIES in reported key financial metrics when comparing this confidential document with Jumia’s F-1 filing from last month.”
“When a company markets to investors ahead of its IPO and then a few months later omits material facts and makes material changes to its key financial metrics to make the business seem viable, this is SECURITIES FRAUD.”
Citron says “Jumia inflated its active consumers and active merchants figures by 20-30%”. It also said 41 per cent of its deliveries were either returned, not delivered or canceled.
Citron, founded by Andrew Left, also highlights Jumia’s continued losses since its launch.
Now even though Andrew Left has a spotty record which led to him being banned recently from trading in Hong Kong for five years by a tribunal which ruled that he had made allegations that were “false and misleading” in a 2012 report on Chinese property developer Evergrande, it is trure that there are challenges to ecommerce in Africa.
Citron is known for issuing damning reports on companies in which it has taken a short position.
Jumia has not issued any statement against these allegations.
Since the report was released on Thursday, Jumia saw its share price drop its steepest in one day after it had already endured five prior days of consecutive losses.
Jumia has not issued any statement against these allegations.
