Jumia has been a great success in the African continent, having a more significant fan base across the continent. As a bonus to their success, Jumia successfully launched an IPO on the New York stock exchange a few weeks ago. The IPO started with an opening price between $14.5, seeing a 75% increase on the same day!
However, the company is now facing problems after the stock hit a 25% decrease over Citron Research allegations terming the IPO as a fraud. According to Citron, a US-based research group termed Jumia “is a scam that needs to immediate SEC attention.” The damning report, which was released on 10th May 2019, has now captured the attention of many.
The Citron report insists on the fact that Jumia has failed in including in their 2019 F1 report 41% of the orders on the platform were either canceled, returned or even undelivered. The report can be found at Citron Research or even on Twitter using the hashtag #JumiaIsNotAfrican.
Furthermore, a Class Action lawsuit has been filed to protect JMIA share purchasers. The Jumia Share buyers through their attorneys have filed a class action lawsuit on 14th May 2019 in South District of New York. The lawsuit claims that Jumia offered false information for material gain in return. Key points outlined in the lawsuit are stated as follows:
- Jumia gave an overestimate of its merchants and active customers
- Jumia’s F-1 report did not offer a factual representation about its orders, cancellations and returned orders, which lead to high estimation of company sales.
- Jumia did not disclose abundant transactions with related parties
- Financial statements released were not conforming to the applicable accounting standards.
The lawsuit could be a nightmare to the company given what the company is already facing since the IPO launch. Howver, Jumia has not responded yet, but keep it locked on TechtrendsKE as the drama unfolds. Meanwhile Subscribe to our newsletter here to get the latest news in tech.