Wall Street Takes Downbeat View on Newly Public e-Commerce Stock

Morgan Stanley had some harsh words for JMIA stock

by Josh Selway

Published on May 7, 2019 at 3:10 PM
Updated on Jun 24, 2020 at 10:16 AM

While Wall Street has been focused on other recent IPOs such as Lyft (LYFT) and Pinterest (PINS), Nigeria's Jumia Technology AG (NYSE:JMIA) also began trading in the U.S. last month. However, initial reviews on JMIA from analysts have mostly been negative, as we'll detail below.

RBC was the first to weigh in on the e-commerce stock, setting a tepid "sector perform" rating and $40 price target. A couple other firms have weighed in with the equivalent of a "hold" recommendation, as well, but Morgan Stanley has a much more bearish outlook. 

Specifically, analysts there released a note that gave JMIA stock an "underweight" rating and $27 price target, while raising concerns about the fact that only about half of active buyers return to the platform over the next year. Morgan Stanley attributes the low retention rates to the immaturity of the market, and says the shares' current price doesn't reflect the uncertainty around the company.

This note is likely the reason Jumia Technology is trading down 6.8% today at $35.16, on pace for its fourth straight down day. The stock opened for trade at $18.95 back on April 12, and eventually went as high as $49.77 a few days later. The company's market cap currently comes in at $2.7 billion, after bringing in $130.6 million in revenue in 2018.

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