Hedge fund manager Josh Koren says the value of New York Stock Exchange-listed pan-African e-commerce company Jumia Technologies could grow tenfold or more in the coming years. Jumia, often referred to as the “Amazon of Africa,” operates an e-commerce platform in 10 African countries. The company’s shares have soared more than 270% so far this year, but Collen, portfolio manager and chief investment officer at Musketeer Capital, believes the company still has plenty of upside. “This is by far the idea that I’m most passionate about. I think it’s the best idea that I’ve found in my entire career,” Coren told CNBC Pro, adding that the stock is among his “most enthusiastic ones so far.” largest” position. fund. Jumia’s stock has experienced significant volatility since its 2019 IPO. However, the enthusiasm for e-commerce stocks driven by the epidemic is relatively short-lived. Concerns about the company’s path to profitability and a broad sell-off in growth and technology stocks sent Jumia shares sharply lower. By October 2023, the stock price fell below $3, down 95% from its peak. The JMIA 5Y line has now rebounded over 300%, with shares trading around $13 on Monday. The company has a new management team and its latest financial performance showed improvement. Koren pointed to Jumia’s recent quarterly results as evidence of the company’s potential. Jumia reported that it has significantly reduced its losses and turned operating cash flow positive for the first time. “At this stage of the company’s life cycle, people expected them to spend money and lose money. But they’re doing the opposite,” Koren noted. “Cash utilization is getting better and better going forward, and margins have been expanding.” Despite the recent surge in its stock price, Jumia’s market capitalization is still just over $1 billion. Koren believes the valuation significantly undervalues the company given its growth potential and strategic position in the African market. “This company is now just a $1.2 billion company. It’s crazy,” Coren said. He predicts that Jumia could be valued at $10 billion within two to three years, and potentially $50 billion within 10 years. “There’s no reason this shouldn’t be a $30 to $50 billion company because every other region in the world has an e-commerce market cap of at least $50 to $60 billion, if not more,” he added. “The U.S. has trillions ( E-commerce market capitalization). There are hundreds of billions in China. There are even 100 billion in Africa.” However, investing in Jumia is not without risks. In addition to the huge stock moves, the company has yet to achieve consistent profitability, with its reported sales in U.S. dollars declining in 2023 compared to 2022. He believes this is currently happening. Jumia also faces challenges unique to African businesses, including infrastructure constraints and currency fluctuations in some markets. However, Koren sees these challenges as opportunities, pointing to increasing investment in Africa’s internet infrastructure by major technology companies and Jumia’s partnership with Elon Musk’s Starlink as positive developments. “All the money is flowing into this market to improve the quality of the Internet, the infrastructure and the technical backbone,” Coren said. “This is the best Internet platform and a direct beneficiary of it.” Analysts at investment bank Benchmark said this month Hedge fund managers earlier echoed the sentiment and began giving Jumia a buy rating and a target price of $14. “As Africa’s leading e-commerce platform, JMIA is poised to benefit from the demographic transition that will fuel e-commerce growth in the region for years and potentially decades,” Benchmark analysts led by Fawne Jiang said in a report. Customers on July 9th.
