While no one was really watching, shares of Jumia, often labeled Africa’s Amazon, hit an all-time trading low of $7.56 on the New York Stock Exchange on Thursday (Sep. 26). It ended the day down to $7.93 or a market capitalization of $614.9 million. In early trading on Friday it eased up to $8.73.
It’s still a far cry from IPO day launch price of $14.50 back in April, when the e-commerce business, which operates in 14 African countries, was valued at around $1.12 billion. The shares took off in the right direction for investors soon after, and at one point in May its shares peaked at $49.77, valuing it at nearly $4 billion.
Of course, it’s important to acknowledge share prices and market caps are often not well aligned with the operational state of publicly traded companies. Those values are often a function of many factors outside the purview of a company’s management.
But in the case of Jumia, in which many watchers of the Africa tech space had placed high hopes, the stock market might be a fair reflection of its challenges. Last month, on its second quarter earnings call, Jumia’s management revealed the company is struggling with internal fraud of improper sales practices of up to $18 million, escalating legal threats and widening losses topping $70 million during the period.
The revelations seemed to back the high-profile worst-case scenario claims made by a short seller analyst who warned investors back in May that the entire business was a fraudulent operation.
The term “unicorn” was coined in 2013 by a Silicon Valley venture capitalist to describe privately held, fast-growing startups like Uber, Airbnb, and others at the time that were reaching billion-dollar valuations within a few years of getting their first rounds of funding. Since then, “unicorns” have been a bit of an obsession in the business world.
Early on it was supposed that “unicorn” status was a rarity. However, the availability of relatively cheap money in the last decade has meant it became less rare–so much so founders and analysts in African markets started to hope for their own unicorns. This was despite the fact the entire African market’s tech funding being orders of magnitude smaller than Silicon Valley’s. It’s probably the right ambition but maybe the scale is wrong and the market should be targeting $100 million valuations rather than a billion.
Jumia has been the unfortunate poster child of that desire for African unicorns. It did briefly attain its “unicorn” valuation with one of its last rounds of funding before going public. Today it’s a far cry from that. And while it’s entirely possible Jumia shares rebound and it returns to a billion-dollar status, it feels unlikely it will happen anytime soon.
Sign up to the Quartz Africa Weekly Brief here for news and analysis on African business, tech and innovation in your inbox
Sign up for the Quartz Daily Brief, our free daily newsletter with the world’s most important and interesting news.
More stories from Quartz: