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Why Jumia Technologies Stock Skyrocketed 50.3% in April

By Keith Noonan - May 3, 2020 at 2:26PM

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The Africa-focused e-commerce stock is still down roughly 42.6% in 2020 despite a big rally last month.

What happened

Shares of Jumia Technologies (JMIA 12.47%) climbed 50.3% in April, according to data from S&P Global Market Intelligence . The e-commerce stock slumped roughly 29% in March's trading as concerns related to the novel coronavirus prompted widespread sell-offs, but shares rebounded last month thanks to signs of increased engagement on its platform and momentum for the broader market.

^SPX Chart

^SPX data by YCharts

Jumia stock rebounded along with the broader market last month, and the company also indicated that it was seeing an influx of sellers looking to participate on its online-retail platform. Many e-commerce services have seen increased usage as the novel coronavirus pandemic has prompted brick-and-mortar outlets to shutter or scale back operations, and Jumia appears to be benefiting from the trend. 

A miniature shopping cart icon on top of a mobile phone.

Image source: Getty Images.

So what

Jumia published a press release on April 14 stating that the company had ramped up its grocery-delivery services and brought new grocery providers onto its platform. Statements from Jumia suggest that the company's platform is seeing heightened levels of engagement across its platform amid the coronavirus crisis, and management believes that the unprecedented circumstances will create opportunities to increase adoption for online-retail and digital-payment services in the African market

Now what

Jumia expects the novel coronavirus to have a substantial impact on African economies, and it's bracing for resulting supply chain disruptions and currency fluctuations. The company has accelerated its cost-reduction initiatives, and it expects to reduce its annual EBITDA loss this year. Management has also said the company is being mindful not to disrupt the business's growth engine when carrying out cost-saving measures.

Jumia stock fell roughly 11.2% on May 1, while the S&P 500 index slid 2.8% in the day's trading. The e-commerce company is set to publish first-quarter results before the market opens on May 13.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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