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Citron Research Calls Jumia An 'Obvious Fraud'

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Citron Research Calls Jumia An 'Obvious Fraud'

Jumia Technologies AG - ADR (NYSE: JMIA) shares tumbled more than 23 percent on Thursday. Amid the sell-off, Citron Research’s Andrew Left called the company a fraud.

What To Know

Jumia made headlines last month when the e-commerce company, which has been referred to as the Amazon.com, Inc. (NASDAQ: AMZN) of Africa, went public on the NYSE at an IPO price of $14.50. Jumia hit the ground running, soaring 75 percent on its first day af trading. Jumia hit a high of $49.77 three days later, but was trading back near $26 after Citron’s new report.

“In 18 years of publishing, Citron has never seen such an obvious fraud as Jumia,” the short seller wrote.

Why It's Important

Left alleges that Jumia fudged its numbers and went public in the U.S. as a last-ditch effort after it could no longer raise money from its top investors in Africa. Left’s claims are based on a “confidential investor presentation” Citron obtained from October 2018.

Left claims there are multiple discrepancies between the numbers Jumia included in the investor presentation and the numbers it reported to the U.S. Securities and Exchange Commission prior to its IPO. For example, Jumia allegedly reported 2.1 million active consumers and 43,000 active merchants for 2017 in its investor presentation but reported 2.7 million consumers and 53,000 merchants to the SEC. Left also claims Jumia failed to disclose that 41 percent of all orders in 2018 were 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,” Left wrote.

What's Next

In a follow-up tweet on Thursday, Left said Jumia’s “equity is worthless.”

Jumia's stock traded around $25.36 per share at time of publication, down 23.8 percent.

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