By July 19, 2019

The Man Who Called JUMIA A Fraud Just Released His Firm’s H1 Report – And There May Be Some Disappointment

By July 19, 2019

The short-seller whose scathing attack on Jumia did a number on the company’s stocks has posted his company’s financial results for H1 2019. And it may have left some people disappointed.

Does the name Andrew Left ring a bell? Well, you could bet on the folks at Jumia cringing at the very mention of that name.

And for those who don’t know, that’s the name of the guy who basically tanked Jumia’s stocks with a provocative document in which he “exposed the smoking gun” that pretty much screamed; “Jumia equity is worthless.”

Before Left came for Jumia, the African e-commerce giant had been having a good time on the New York Stock Exchange (NYSE). Only weeks prior, it had filed for an IPO on the NYSE and at the end of its first trading day, share prices had appreciated significantly.

By the fourth day, the company had a valuation of USD 3.76 Bn. In the days that followed, the self-acclaimed first African tech company to list on the NYSE was doing pretty numbers.

But the honeymoon period was short-lived. After the known short-seller dropped his bombshell, it caused panic among investors. The Citron boss accused Jumia of falsifying figures to mislead investors ahead of its IPO, stating that it had “never seen such an obvious fraud as Jumia in all its 18 years of publishing and demanding that the Securities and Exchange (SEC) take immediate action.

And everything pretty much went downhill from there. Stocks plummeted and lawsuits were filed. Nothing’s been the same since then. And Andrew Left became both villain and hero.

So when the short-seller released his company’s financial report for the first half of 2019, it’s only natural that some people would’ve been watching on the sidelines trying to get a hit of schadenfreude. But they may have been left disappointed. Andrew Left’s company isn’t doing that bad at all, though, it’s not exactly doing great and could actually be better.

According to an investment letter posted on the fund’s website recently, Andrew Left’s Citron Capital posted a net return of 24.7 percent after fees and expenses in the first half of 2019, while stating that “it has been an extraordinarily challenging environment to be a short seller.” 

In the letter, it was revealed that the firm was able to find opportunities in the initial public offering market betting against shares of Jumia Technologies and betting on disruptive business models such as Revolve.

Citron also commented on its stance in shares of Beyond Meat, which Left in May said on Twitter he was shorting because valuations had become “Beyond Stupid.”

In Citron’s investment letter, it read; “While Citron can’t justify Beyond Meat’s (BYND) absurd valuation, we cannot ignore unfavorable technical dynamics (e.g., tight float and high borrow cost). We were able to capitalize on trading around our position in Beyond Meat, which was another top contributor to fund performance during H1 2019.”

In May, Left said Citron believed Beyond Meat shares would go back to USD 65.00 a share. Beyond Meat shares are currently trading around USD 170.00 a share. Looks like the folks at Citron missed this one.

And it also looks like the folks at Jumia whose stocks have not recovered since the “Left-handed” shove will have to wait a while longer for that oddly healing dose of epicaricacy.

Featured Image Courtesy: CNBC

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