Investors one-year losses grow to 72% as the stock sheds US$170m this past week

Simply Wall St
January 11, 2022
Source: Shutterstock

It's not a secret that every investor will make bad investments, from time to time. But it should be a priority to avoid stomach churning catastrophes, wherever possible. So we hope that those who held Jumia Technologies AG (NYSE:JMIA) during the last year don't lose the lesson, in addition to the 72% hit to the value of their shares. That'd be a striking reminder about the importance of diversification. We wouldn't rush to judgement on Jumia Technologies because we don't have a long term history to look at. Furthermore, it's down 46% in about a quarter. That's not much fun for holders.

Since Jumia Technologies has shed US$170m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

Check out our latest analysis for Jumia Technologies

Because Jumia Technologies made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Jumia Technologies' revenue didn't grow at all in the last year. In fact, it fell 2.9%. That's not what investors generally want to see. The share price fall of 72% in a year tells the story. Holders should not lose the lesson: loss making companies should grow revenue. But markets do over-react, so there opportunity for investors who are willing to take the time to dig deeper and understand the business.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

NYSE:JMIA Earnings and Revenue Growth January 11th 2022

If you are thinking of buying or selling Jumia Technologies stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Given that the market gained 15% in the last year, Jumia Technologies shareholders might be miffed that they lost 72%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. The share price decline has continued throughout the most recent three months, down 46%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. It's always interesting to track share price performance over the longer term. But to understand Jumia Technologies better, we need to consider many other factors. Take risks, for example - Jumia Technologies has 3 warning signs we think you should be aware of.

We will like Jumia Technologies better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.