What happened

Shares of Jumia Technologies (JMIA -9.36%) sank 35.6% in July, according to data from S&P Global Market Intelligence. There wasn't any fresh company-specific news for the Dubai-based African e-commerce company, but its stock has continued to lose ground following a post-IPO hangover and a critical note from Citron Research alleging that the company had misled investors. 

JMIA Chart

JMIA data by YCharts.

Jumia Technologies had its initial public offering in April, pricing its stock at $14.50 per share. Shares reached just shy of $47 per share at the beginning of May, but coverage published by Citron Research's Andrew Left kicked off a steep decline for the stock and a wave of short-selling. The stock has now dipped below its IPO price and is trading in the $13.50 range -- valuing the company at roughly $1 billion.

A man holding a mobile phone that has a miniature shopping cart on top of it.

Image source: Getty Images.

So what

Concerns that Jumia may have misreported important business data, and that the stock may be generally richly overvalued, have continued to weigh on the company's share price over the last few months.

Citron Research published its report on May 10 alleging that Jumia had misrepresented crucial business data in its S1 filing and labeled the company as fraudulent. Left stated that Citron had come into the possession of a presentation that included data that varied widely from information included in Jumia's IPO prospectus.

According to Left, these documents show that high percentages of the company's orders were fraudulent or returned and that the company's stated gross merchandise volume was reported to be 30% higher than what was stated in internal company documents. Left went so far as to describe the stock as "worthless" and published a follow-up video on May 28 -- along with a supporting document that included links said to the internal Jumia emails and documents that he said constituted "indisputable evidence of fraud."

Now what

Citron Research and Andrew Left are focused on short-selling, and a critical note from Left should not be treated as a surefire indication that a stock or business is in trouble. On the other hand, his coverage on Jumia raises some important issues and points of concern and investors should probably exercise caution with the stock. While Africa is a large and growing market and e-commerce in the continent has appealing potential for growth, there are legitimate concerns surrounding the company's IPO filing and the business' operating and reporting standards -- and management has yet to provide extra visibility that might assuage investor concerns. 

Jumia is scheduled to publish its second-quarter earnings results on Aug. 21 and could provide some extra insight and some manner of response to Citron's coverage at that point. 

Editor's note: An earlier version of this article referred to the continent of Africa as a country. The article has been updated.