Every now then, various frauds (that are probably all around us) get revealed. This seems to be the case with recently went public Jumia Technologies AG (NYSE:JMIA), which has been slammed in Citron Research’s newly published report on the stock that unveils the truth about the company with the aim of protecting US Investors. Namely, Citron Research’s Andrew Left said that “Jumia is the worst abuse of the IPO system since the Chinese RTO fraud boom almost a decade ago”.
For those who are not familiar with the stock, Jumia Technologies AG (JMIA) is a pan-African e-commerce platform that mainly sells consumer electronic products. It went public on the New York Stock Exchange and started trading on April 12th with a price of $25.46. Its initial price started climbing and soon hit its highest mark on May 1st when it reached $46.99, which represented an increase of 84.56%.
Then, Citron Research’s’ report on the stock, which presents “SMOKING GUN” to prove the equity is actually “WORTHLESS”, got traction and the consequences were seen soon. In the report, Citron Research examines “material discrepancies” between Jumia’s confidential investor presentation (published in October 2018) that was allegedly the company’s last try to collect money and its F-1 filing with the SEC from last month. Citron writes that there are many material changes in its crucial financial metrics between these two documents, which represents “SECURITIES FRAUD”. Among those inconsistencies were: 20-30% overblown active consumers and active merchants figures; avoiding to report in its F-1 filing the data about 41% of returned orders (not delivered, or canceled). The last one indicates that almost 30% of all orders were canceled last year, which is unacceptable for this type of company, making it smell like a fraud.
The fund further writes that Nigerian media have already covered “the systematic fraud at Jumia” being more familiar with the company’s activities and history than Citron is, citing the following: “Jumia is ‘sitting on gun powder which might explode any moment as the retail outfit is filled with many shady deals’”.
The consequences of Citron’s report are best seen in the stock’s price recent decline – since May 1st, when it reached its highest price ($46.99), until today, Jumia’s stock lost 42.78%, having a closing price on May 9th of $26.89.
This article is originally published at Insider Monkey.