Baillie Gifford’s reduced stake in Jumia suggests that the asset management firm may not be as bullish on the e-commerce giant as it once was. While Jumia still ranks among Africa’s leading online retailers, its stock has seen sporadic declines in recent months, likely impacted by slowing growth in key markets such as Nigeria and South Africa.
Baillie Gifford’ s ownership of Jumia has decreased significantly in recent months. This might be due to the company’s financial troubles, or Baillie Gifford may have decided to sell its shares.
Founded in 1910, Edinburgh-based Scotland Asset Management is one of the oldest asset management firms in the world. SAMA is a respected investor in private and public tech companies, as well as investments across other geographies including China’s Alibaba and NIO, and African-based internet businesses Naspers and Jumia. The company has a long history of supporting innovative companies, with some of its most notable successes including Amazon, Google, Salesforce, Tesla Motors (before it was taken over by Tesla Inc.) Lyft (before it was acquired by Uber), Airbnb and Spotify.
Jumia, an e-commerce giant based in Africa, has seen its stock price drop due to investor concerns that the company’s business model may not be sustainable. Baillie Gifford, Jumia’s largest institutional investor, has been selling and buying back a portion of its shares every January since the company went public in 2019. This most recent move is Baillie Gifford’s first significant share drop yet. While it remains the e-commerce platform’s largest shareholder, investors are concerned about Jumia’s long term viability and whether it can keep up with major competitors like Amazon.
Jumia is a major e-commerce company in Africa, with operations in 10 countries. In recent years, Jumia has been losing money and has made changes to its management after installing Francis Dufay as acting CEO to replace co-founders Sacha Poignonnec and Jeremy Hodara, who resigned from their co-CEO roles. The change came with immediate cuts across various product lines and redundancies, including letting go of a few executives from its Dubai office. These measures are intended to chase profits that have eluded Jumia thus far.
Jumia, an African e-tailer, has seen its stock price reduced by 51% within the past year and saw its stock drop to $3.88 per share after Wednesday’s news. Despite this progress, public confidence in Jumia seems to have waned as it closed the third quarter with a liquidity position of $284.7 million, among which $104.3 million is in cash and cash equivalents
Baillie Gifford’s decision to sell some of its shares may be motivated by Jumia’s poor performance on the stock market, but it could also be a sign that the investment firm is slashing back on its mounting losses. One possibility is that Baillie Gifford feels less confident about the prospects for growth stocks in an environment where rates are rising and fears of a recession are increasing. However, this doesn’t explain why Baillie Gifford increased its position in otherloss-making companies such as Chinese EV maker NIO and Wix.com this past week. Jumia’s next earnings call next month should offer more insight into the decision-making process behind these moves.
Jumia, an online shopping company in Africa, has seen its share price drop dramatically since early 2018. However, other large shareholders have increased their stakes in the company by buying up shares. This indicates that they believe Jumia has a bright future and will be successful despite the current downturn.
