E-commerce

Better E-Commerce Stock: Jumia Technologies or Wish? – Motley Fool

Summary

Jumia (NYSE:JMIA) and ContextLogic (NASDAQ:WISH), the parent company of Wish, have both been disappointing e-commerce investments.

Jumia, a German company that gained an early mover’s advantage in Africa’s nascent e-commerce market, went public at $14.50 per share more than two and a half years ago. Its stock hit an all-time high of $69.89 back in February, but subsequently tumbled back to about $15 per share.

Wish, which mainly allows Chinese merchants to sell cheap products to…….

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Jumia (NYSE:JMIA) and ContextLogic (NASDAQ:WISH), the parent company of Wish, have both been disappointing e-commerce investments.

Jumia, a German company that gained an early mover’s advantage in Africa’s nascent e-commerce market, went public at $14.50 per share more than two and a half years ago. Its stock hit an all-time high of $69.89 back in February, but subsequently tumbled back to about $15 per share.

Wish, which mainly allows Chinese merchants to sell cheap products to overseas buyers, went public at $24 per share last December. The stock hit an all-time high of $32.85 in late January, but it’s only worth about $5 a share today.

Let’s see why Jumia and Wish initially impressed some investors, why that interest quickly faded, and if either stock is a potential turnaround play.

Image source: Getty Images.

Jumia is gradually recovering

When Jumia filed its IPO in early 2019, it impressed investors with its robust growth in gross merchandise volume (GMV), total orders, annual active customers, and total payment volumes (TPV) on its payment platform JumiaPay. Its revenue was also growing at a healthy clip.

However, Jumia’s growth decelerated significantly over the past two years, even as the pandemic forced more people to shop online:

Growth (YOY)

FY 2019

FY 2020

9M 2021

GMV

33%

(19%)

(4%)

Orders

85%

5%

15%

Annual Active Consumers

52%

12%

8%

TPV

127%

58%

12%

Revenue

24%

(13%)

5%

Source: Jumia. YOY = Year over year. FY = fiscal year. 9M = first nine months.

Three major changes caused that slowdown: It shut down its marketplaces in Cameroon, Tanzania, and Rwanda to cut costs in 2019, it expanded its third-party marketplace while downsizing its first-party marketplace (which strengthened its gross margins but reduced its revenue), and it increased its mix of cheaper consumer staples to attract more lower-income customers.

That’s why Jumia’s GMV declined even as its total orders increased. It served 7.3 million annual active customers at the …….

Source: https://www.fool.com/investing/2021/11/18/better-e-commerce-stock-jumia-technologies-or-wish/