Why Jumia Stock Plummeted Today
Key Points
Jumia posted strong sales growth in Q4, but the business notched a wider-than-expected loss.
Jumia stock is still up big over the last year, but investors may need to see improvements on the margin front going forward.
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Jumia (NYSE: JMIA) stock took a hit on Tuesday. The African e-commerce company's share price fell 15.8% in a day of trading that saw the S&P 500 decline 0.4% and the Nasdaq Composite sink 0.6%.
Jumia published its fourth-quarter results before the market opened this morning and reported sales that came in ahead of Wall Street's expectations. On the other hand, the business posted a wider-than-anticipated loss.
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Jumia misses Q4 earnings expectations
Jumia managed to grow revenue 34.4% year over year to hit $61.4 million in the fourth quarter, beating the average analyst estimate of approximately $60.66 million. Despite the sales beat, Jumia's loss for the quarter came in higher than anticipated. The business posted a loss of $0.08 per share in the period, exceeding the average analyst estimate's call for a per-share loss of $0.05.
What's next for Jumia?
Even with today's valuation pullback, Jumia stock is still up approximately 159% over the last year. The company now has a market capitalization of approximately $1.27 billion and is valued at approximately 5.2 times this year's expected sales. k
Given Jumia's recent sales growth rate, the company could appear undervalued on a price-to-sales basis. On the other hand, the company has an uneven growth history -- and concerns remain about the business's ability to shift into delivering reliable profits.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
