Jumia stock rallies 20% on future profit hopes

Shares of African e-commerce firm Jumia surged as much as 20% in early trading Friday after the e-commerce company reiterated its target for full-year profitability on a loss before income tax basis in 2027, even as it reported a wider operating loss in the first quarter.

The stock climbed to $2.82 from its previous close of $2.40, pushing the company’s market capitalisation to $351.47 million, an increase from $285.2 million at the end of the fourth quarter of 2024.

The Africa-focused online retailer’s first-quarter revenue declined to $36.3 million, down from $49.3 million in the same period last year. The company attributed the contraction primarily to local currency devaluations in key markets, including Egypt, and a weaker performance in its corporate services division. First-party revenue saw a 21% year-over-year decrease, totalling $17.8 million.

Despite these top-line pressures, CEO Francis Dufay maintained an optimistic tone. “We believe to be on track for the fourth quarter of 2026, targeting full-year profitability on a loss before income tax basis in 2027,” he said during the earnings call. But market sentiment remains fragile.

Operational loss nearly doubled to $18.7 million from $8.3 million in Q1 2024. Although Jumia recorded a 12% increase in total orders (5.1 million), its gross merchandise value (GMV) declined to $161.7 million. This signals a continued shift toward lower-value transactions. A trend that reflects Jumia’s push into underserved, upcountry regions, which now account for 58% of all orders.

This strategic pivot has had an impact on customer profiles and basket sizes. While order volume rose, average order value dropped. Analysts warn that this could hurt profitability in the medium term unless offset by higher frequency or improved operational efficiency.

Jumia reported a cash balance of $61.6 million and total liquidity of $110.7 million. Though the liquidity runway remains sufficient for near-term operations, the uptick in burn rate raised investor eyebrows, especially amid continuing macroeconomic uncertainty in Jumia’s operating regions.

Fintech remains a bright spot. JumiaPay recorded 2 million transactions, growing 1% year-on-year, driven by increased usage on delivery. While still a small part of overall revenue, JumiaPay’s infrastructure plays a critical role in enabling frictionless commerce and reducing cash-handling risks.

For now, all Jumia has is optimism. To be clear, the company has done a good job in reducing its losses over the past eight quarters. It has also had a great deal of staying power and swift strategy shifts. Exited uninspiring markets, cut staff and advertising. Tamed devaluation, upscaled fintech. Profitability is the only thing left to complete Dufay’s tactics on the chessboard. 2027 is not very far for a subtle (election-like promise). Shareholders are happy now. Will they be happier then? Will the promise be fulfilled? Only time will tell.