Shares of African e-commerce company Jumia Technologies (NYSE:JMIA) were slammed for a second day in a row on Friday. The stock fell as much as 32.6% and is down 26.8% as of 1:13 p.m. EDT.
On Thursday, the stock declined following a report from short-seller Andrew Left of Citron Research that claims the company inflated its active customers and active merchants numbers when it filed its prospectus before its initial public offering earlier this year. Friday's decline is likely because analysts covering the stock aren't defending the company. In addition, several law firms have announced investigations into whether there were disclosure violations.
"In 18 years of publishing, Citron has never seen such an obvious fraud as Jumia," wrote Left in a scathing report on Thursday.
Now Bloomberg is saying Wall Street's silence isn't a good sign. "The sell-side silence stands in stark contrast to the typical response from the big banks that cover some of Left's most recent targets," wrote Bloomberg's Bailey Lipschultz.
Meanwhile, a handful of law firms announced investigations into the matter.
Investors should look for a detailed response from management. In addition, investors may want to avoid this stock until it's clear whether Jumia has presented fraudulent information.
At the same time, investors should take Left's report with a grain of salt. His assertions haven't always proven correct.