Shares of Jumia Technologies (JMIA 2.64%) shot up 24% this week, according to data from S&P Global Market Intelligence. The African e-commerce and payments provider saw solid growth in the first quarter, causing investors to get more bullish on the stock. It is still down 87% from all-time highs set in 2021.
Here's why Jumia Technologies stock soared this week, and whether investors should consider buying the stock right now.
NYSE: JMIA
Key Data Points
Strong growth, lack of profits
Jumia aims to build an e-commerce marketplace in Africa, focusing on countries such as Nigeria, Kenya, and Morocco. Last quarter, revenue grew 39% year over year to $50.6 million, driven by a 31% increase in marketplace spending to $211 million. Orders also grew 31%, while active customers increased 26% over the period.
Growth looked great across the board in the quarter. However, for Jumia, the problem remains profitability. It posted an operating loss of $13.9 million in Q1, and has never generated an operating profit since going public in 2020.
Image source: Getty Images.
Is Jumia stock a buy?
Jumia has been a highly volatile stock, mostly disappointing investors since going public. With a market cap of just $1 billion and a stock price of $8.70 as of this writing, investors may think shares are a bargain right now.
Remember that profitability is all that matters at the end of the day. Jumia has never been profitable and will likely continue to struggle to turn a profit due to the complexities of operating an e-commerce network in Africa. Stay away from Jumia stock right now.
