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Why Jumia Technologies Stock Soared 42% in January

By Jon Quast - Updated Feb 3, 2021 at 8:13AM

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Jumia keeps making moves in hopes users will make more everyday purchases on the platform.

What happened

Shares of Jumia Technologies (JMIA 4.52%) soared 42.6% in January, according to data provided by S&P Global Market Intelligence. The stock was one of the top performers in 2020, up 500% last year alone. And investors remained enthusiastic in January, possibly because of positive news regarding the company's food-delivery business.

So what

To be clear, news for Jumia was scarce in January, despite its market-crushing performance. But according to an article from Nigeria Communications Week, the company expanded its food-delivery service in Nigeria last month. It may have just been a coincidence, but the stock surged in the days following this development.

A businessman riding a rocket ship expelling cash exhaust flies over a multi-colored bar chart.

Image source: Getty Images.

Greater availability of food delivery fits the narrative Jumia's management laid out at the Needham Virtual Growth Conference in mid-January. According to management, the average value of Jumia users' orders shrinks over time. The trend suggests users start thinking about e-commerce for more mundane regular purchases rather than solely for one-time special purchases. That's an important shift as Africa dives deeper into e-commerce, and food delivery certainly plays a role in that.

Now what

To be sure, Jumia made some game-changing moves in 2020 that I believe make it a better company. But for this to be a long-term winner, the company will have to start backing up hopes with business results. Investors in this growth stock will get their next look at its financials when it reports full-year 2020 earnings on Feb. 24.

 

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