Things Are Not Getting Any Better For Jumia Despite Expiration Of IPO Lockup Period

The post-IPO struggles of the Africa-focused retail e-commerce platform, Jumia, is showing no signs of letting up. If anything, it could be getting worse.

Fresh reports have it that its share price has fallen by a further 4 percent just a day after the lockup period expired for its IPO listing on the New York Stock Exchange (NYSE) which happened in April this year.

The expiration of the lockup period had been previously mooted as something that could bring about an upturn in the fortunes of the troubled company.

But one day after Jumia’s big, pre-IPO investors like MTN, Rocket Internet, Goldman Sachs, Pernod Ricard, and Mastercard, got their first chance to cut their losses by triggering big stock sales, things have only worsened even as experts had previously thought it a chance at respite.

The lockup period prevented Jumia’s major, early shareholders from their selling their shares in the company in the first 180 days following the IPO.

Wednesday, October 9, marked the expiration of that lockup period and Thursday, October 10, offered the first chance for those who purchased equity pre-public listing to sell their shares.

But the latest numbers would suggest that the immediate big stock sale that had been spoken about, albeit tentatively, hasn’t quite happened.

TechCrunch reports that Jumia’s stock price began Thursday at USD 7.54 but fell to an all-time low of USD 6.98 as of 2 pm, and then closed 35 cents down from opening, at USD 7.19.

This means that the lockup expiry may not have much of an impact on the share price as it appears Jumia’s early investors are not quite ready to sell at this moment and suffer huge losses.

Bloomberg reports that MTN, the biggest investor in Jumia, had planned to sell its stake after the six-month lock-up in an effort to scale back on e-commerce investments, though this information came as far back as April before Jumia’s stock first took a nosedive because of a damning report that called the company a fraud.

Jumia had been in cloud nine after making history as the first Africa-focused company to list on a major exchange.

After listing on the NYSE in April amidst much fanfare, its share price had initially shot up by as much as 70 percent in a matter of days from the listing price of USD 14.50 per share.

But Jumia was brought back down to earth after a damning report by Andrew Left of Citron Research called out the company for allegedly misleading investors by doctoring its numbers. It’s a revelation that has since triggered lawsuits against Jumia that are believed to still be ongoing.

Jumia’s stock was soaring high before that claim came to light, but since then, it has plunged downhill. The shares are now down almost 50 percent from its listing price and 80 percent from its peak price of USD 46.99 recorded in early May.

And it doesn’t look like things will let up anytime soon as the company’s most recent financial report reflected mounting losses (as has been the case for years), despite revenue growth and increased customer base.

Featured Image Courtesy: PoliticalEconomist