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Exclusive: Stephen Weiss Talks Jumia-Amazon Comparisons, JumiaPay Becoming Square Of Africa

Exclusive: Stephen Weiss Talks Jumia-Amazon Comparisons, JumiaPay Becoming Square Of Africa

Benzinga recently chatted with Stephen Weiss, the managing partner of Short Hills Capital Partners and frequent CNBC guest on “Halftime Report," to get his take on Jumia Technologies (NYSE: JMIA).

Comparisons To Amazon: Weiss weighed in on Jumia being called the (NASDAQ: AMZN) of Africa.

“The core business of Amazon is the same as the core business of Jumia,” Weiss said. 

Dominant Position In Africa: Weiss discussed the first-mover advantage Jumia has in Africa.

In Egypt, Weiss said Jumia competes with — but has still seen strong growth.

“[Jumia is] growing like a weed there,” Weiss said, adding that Jumia is creating a moat despite it being tough to enter emerging markets.

“Those 11 countries are better positioned for online shopping than possibly the U.S.,” Weiss said of Jumia’s operating regions. He thinks online penetration is still significantly lower than where it should be.

“A lot of them don’t even have highways, paved roads," he said.

Watch the full interview in the video below:

Jumia announced plans recently to enter three additional African countries, with plans for launches in Ethiopia, the Democratic Republic of the Congo and Angola.

Weiss called the development a "smart move." 

Weiss is unworried about competition for Jumia and said the company doesn’t need to sign with a partner like Softbank or Alibaba Group (NYSE: BABA), but would welcome the added capital.

“I’m not worried about it, not at all, I’d probably embrace it.”

JumiaPay, Square Comparisons: Weiss said a company like Jumia needs both e-commerce and payment platforms and agreed with comparisons to Alibaba and MercadoLibre (NASDAQ: MELI).

He called the area of fintech a fantastic area of growth.  

Weiss sees more growth in JumiaPay compared to the current 34% penetration amount in transactions on the Jumia e-commerce platform: “Jumia can become the Square of Africa.”

Weiss believes spinning off JumiaPay into a separate business could give investors an option to buy the Square Inc (NYSE: SQ) or Paypal Holdings (NASDAQ: PYPL) of Africa.

Related Link: 5 Takeaways From Jumia's November Presentation

Weiss On Financials: Weiss said he initially didn’t like the recently reported third quarter from Jumia but changed his mind after speaking to management.

Jumia is going for profitability and could reach it quicker than other emerging e-commerce companies, he said. 

One strength Weiss pointed out was the company’s logistics business, which sees Jumia use over 300 partners in warehouses and delivery, lowering costs. 

“This is a company building for profitability.”

Weiss said Jumia could be profitable as early as next year, which he said was significant for an e-commerce company going public only last year.

Weiss On Citron, Owning Mistakes: Weiss and Benzinga discussed the turnaround from Citron Research going from bear to bull on Jumia and setting a new price target of $100.

Weiss praised Citron’s Andrew Left, saying it's hard to make money on the short side.

“The company corrected some things,” Weiss said of Citron’s initial short story thesis. “You have to keep an open mind as an investor.”

Weiss thinks Citron added credibility to the long-term Jumia story and bought new eyes to the stock.

What’s Next: Weiss spoke on the recent at-the-market share offering from Jumia.

“This may be the most ill-advised transaction,” Weiss said.

He applauded the company for seeking to raise funds, since that’s what growth companies should do, but said it was a poor decision at this price.

Weiss said he would tell the company to pull the share offering.

Weiss On Valuation: Weiss told Benzinga he purchased more shares of Jumia on Monday and Tuesday.

“The market shorts took it too low,” Weiss said, calling the company a relatively new public entity. He believes shares will recover and told us the price target of $100 from Citron Research was “very realistic.”

“The sum of the parts is more valuable than the whole.”

Weiss praised the company for considering spinning off its fintech and logistics businesses.

He welcomes the company’s discussion to someday spin off its fintech business and logistics businesses.

JMIA Price Action: Shares of Jumia are down 12% over the last five trading days. Jumia shares are up over 350% year-to-date.


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