Africa’s Amazon is what Jumia has been labelled by the American media since its IPO at the New York Stock Exchange.
The IPO went well, opening at $45, briefly rising 75% before plummeting to new lows witnessed today. This plunge came after Citron Research released a report in which it accused Jumia of being a well orchestrated fraud.
This is not Jumia’s only worry. Shareholders, through law firm, Robbins Geller Rudman & Dowd LLP, filed a lawsuit on the 14th of May in the court of the Southern District of New York.
The lawsuit contains numerous accusations revolving around Jumia’s failure to disclose critical information, and misleading investors. Among the accusations are:
- That Jumia had materially overstated its active customers and active merchants;
- That Jumia representations about its orders, order cancellations, undelivered orders and returned orders lacked a sufficient factual basis and materially overstated the Company’s sales;
- That Jumia failed to sufficiently disclose related party transactions; and
- That Jumia’s financial statements were presented in violation of applicable accounting standards.
These allegations are derivative of the accusations given in Citron Research’s report, in which it claimed the company failed to state the return, non-delivery and/or cancellations of 41% of all orders made on the platform in their F-1 filing.
Related article: Citron Report claims Jumia is a fraud and its equity is worthless
A section of the report read, “In 18 years of publishing, Citron has never seen such an obvious fraud as Jumia. As the media in the US is naively anointing Jumia as the ‘Amazon of Africa’, the media in its home country of Nigeria has plethora of articles discussing the widespread fraud in this Nigerian company. Not even that elusive Nigerian prince can cover this one up.”
As it plans to open up Jumia Pay in Kenya, the company is yet to publicly respond to the lawsuit.
