One of the more under the radar stocks that has been on fire over the last couple of weeks is Jumia Technologies (NYSE:JMIA), the African company that is attempting to do for Africa what Amazon (NASDAQ:AMZN) has done for America. That’s right in the same vein as Sea Limited (NYSE:SE) and Mercadolibre (NASDAQ:MELI), Jumia is an eCommerce platform that is taking the continent by storm. Jumia’s stock has now gained nearly 110% over the last month, and over 500% over the last 52-weeks.
Recently, Jumia has been on quite the roll as stellar underlying earnings numbers and the potential for being what investors hope could be the next Mercadolibre, has sent the stock into orbit. Jumia’s gross profit rose by 22% and its total payment volume grew by over 50% year-over-year from the same quarter in 2019. This all sounds very familiar, but at its core, Jumia has a different operating model than Amazon or Sea or MELI. Jumia does not want to be a direct seller, but instead, wants to be a third-party seller that helps other companies use its platform to reach customers.
Jumia was founded in 2012, and since then has grown to the leading Pan-African eCommerce platform in a region of the world that is rapidly developing its internet infrastructure. Similar to how Mercadolibre is capitalizing on a lack of concrete financial systems in Latin America, Jumia is hoping to make online shopping an everyday thing on the African continent. The shift in focus from a sell-everything site, to a digital marketplace where vendors and companies can each sell their goods while leveraging the Jumia platform has been golden for its clients and its investors.
Jumia also has JumiaPay, its answer to PayPal (NASDAQ:PYPL) and Square (NYSE:SQ), with similarities to Mercado Pago from Mercadolibre and SeaMoney from Sea Limited. Digital payment systems are the future and in these developing regions of the world, faster access to payment methods and the digitization of currency is growing more popular by the day. While not a significant part of the revenues yet, expect JumiaPay to grow alongside Jumia’s platform in the future.
Growth investors know that targeting these developing regions of the world may be the fastest way to exponential gains in stock portfolios and we certainly have seen that over the past month. Shares moved quickly from $17 to $37 in the blink of an eye, so if you missed the dip, do not worry, I did too. Jumia needs to show some more before I start a position in the stock, including growing JumiaPay and rapid expansion without bleeding too much money. But with a very small market cap of only $3 billion, this stock certainly has all the makings of a multi-bagger when all is said and done.
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