Shares in African eCommerce company Jumia Technologies took a dive on Monday (May 13) after Q1 losses were reported to be bigger than the year before, according to a report from Bloomberg.
The results are the company’s first after going public, and come after Citron Research said the company was a short target. Jumia Technologies lost about 25 percent of its market value in just three sessions before Monday’s market opened.
According to reports, short seller Citron Research claimed it had a confidential presentation Jumia made to investors in October. Citron said there were “material discrepancies” between the numbers the company reported in April in its initial public offering (IPO) filing and the presentation. It also claimed that Jumia inflated its active merchant numbers and its active customer base. In addition, Citron said that 41 percent of deliveries were not delivered, or were canceled or returned.
“When a company markets to investors ahead of its IPO and then a few months later omits material facts and makes material changes to its key financial metrics to make the business seem viable, this is securities fraud,” Citron alleged.
The report pointed out that Citron puts out “damning reports” about firms in which it has taken a short stake. The firm became well-known after it targeted Valeant, a pharmaceutical firm. That company’s stock price tumbled following fears over a heavy debt load and accounting practices.
“We will not be distracted from executing on our strategy and carrying out our mission by those who seek to create doubts to profit at our expense and that of our long-term stakeholders,” Jumia Co-chief Executive Officer Sacha Poignonnec said on the reporting call with analysts.
The company reported Q1 revenue of 31.8 million euros, while last year it reported 28.3 million. Jumia remains up 35 percent from its April IPO, although it has shed a lot of value in the past eight days. The company’s Q1 operating losses increased to 45.5 million euros, from a loss of 34.3 million a year prior.