It was a red Wednesday for all JMIA stock holders as Jumia Technologies shares plunged almost 20% in one trading day.
But how and why this happened? Why is JMIA stock price down when it should go up on great earnings? The reason behind this fall sits in the GMV numbers.
What is GMV? GMV or “Gross Merchandise Value” corresponds to the total value of orders for products and services. Even though GMV was up for almost all e-commerce companies in 2020 (for obvious reason) this was not the case for Jumia Q2 2020 results.
And this happened despite a 40% surge in new customers and a 8% increase in orders, YoY.
The good news for Jumia
But not all is bleak for JMIA because during the not-so-good trading day one of the better Wall Street analysts maintained a BUY rating for JMIA shares with a $15 target.
It is Mark Mahaney from Canadian based RBC Capiatal that expects JMIA share price to go where it was yesterday.
$JMIA Mark Mahaney from @RBC has been covering Internet stocks since 1998. Prior to joining our research team, he worked on both the sell side and the buy side, including with American Technology Research, $MS , and $C. Mark holds an MBA from Wharton Business School, an MA from https://t.co/3UVOlPtdtj— KD (@highNtight1985) August 12, 2020
Even though this seems like a good news for JMIA, I would say that investors are so greedy right now that $2 jump is not something that will raise many eyebrows. JMIA needs to step up the game.