Jumia Technologies, a pan-African e-commerce company listed on the New York Stock Exchange, could see its value rise more than 10-fold in the next few years, according to hedge fund manager Josh Coren. Dubbed the “Amazon of Africa,” Jumia operates an e-commerce platform in 10 African countries. The company's shares have soared more than 270% since the start of the year, but Coren, a portfolio manager and chief investment officer at Musketeer Capital, believes the company still has a lot of upside. “This is the idea I'm most passionate about to date. I think it's the best idea I've ever found in my career,” Coren told CNBC Pro, adding that the stock is his fund's “biggest position ever.” Jumia's shares have seen significant volatility since its 2019 initial public offering. After listing at $14.50 a share, the stock has soared to an all-time high of about $62 in 2021, according to FactSet data. But the pandemic-induced frenzy for e-commerce stocks was relatively short-lived. Concerns over the company's path to profitability and a broader sell-off in growth and technology stocks caused Jumia's shares to plummet. By October 2023, the stock was below $3, down 95% from its peak. JMIA 5-Year Line But now, the stock has recovered more than 300%, with shares trading around $13 on Monday. The company has new management and its latest financial statements show improvement. Coren pointed to Jumia's recent quarterly results as evidence of the company's potential. Jumia reported that its operating cash flow turned positive for the first time and significantly reduced its losses. “At this stage in the company's lifecycle, people expect them to spend and make losses. They've done the opposite,” Coren noted. “Cash utilization is improving significantly going forward and margins are expanding.” Despite the recent share price surge, Jumia's market capitalization remains just over $1 billion. Coren believes the valuation significantly undervalues the company, given its growth potential and strategic position in African markets. “This company is only a $1.2 billion company right now, which is insane given what it is,” Coren said. Coren predicts Jumia could reach a market cap of $10 billion within two to three years and $50 billion in 10 years. “There's no reason this company can't be a $30 billion to $50 billion company, because every other part of the world has an e-commerce market cap of at least $50 billion to $60 billion,” he added. “The U.S. has a market cap of $1 trillion. [dollar e-commerce market cap company]China has hundreds of billions, Southeast Asia has 100 billion. Africa has zero.” But investing in Jumia is not without risks. In addition to significant share price fluctuations, the company has yet to achieve consistent profitability, with reported revenue declining in US dollar terms in 2023 compared to 2022. Coren attributes this to deliberate streamlining of operations and currency headwinds that he believes have now turned into tailwinds. Jumia also faces challenges unique to African businesses, including infrastructure limitations and currency fluctuations in some markets. But Coren argues that these challenges are opportunities, pointing to increased investment by big tech companies in Africa's internet infrastructure, as well as Jumia's partnership with Elon Musk's Starlink as positive developments. “All the money is flowing into this market in terms of improving the quality of the internet and the infrastructure and the technology backbone,” Coren said. “This is the premier internet platform that will benefit directly from that.” Echoing the hedge fund manager's views, analysts at investment bank Benchmark initiated coverage of Jumia with a “buy” rating earlier this month. They rate the stock JMIA and have a price target of $14. “As a leading e-commerce platform in Africa, JMIA is well-positioned to benefit from the demographic shifts that will drive e-commerce growth in the region for years, and potentially decades,” Benchmark analysts led by Fawn Jan wrote in a client note on July 9.
