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Jumia Technologies AG (NYSE:JMIA) shareholders might be concerned after seeing the share price drop 21% in the last quarter. But that isn't a problem when you consider how the share price has soared over the last year. Few could complain about the impressive 398% rise, throughout the period. So it is not that surprising to see the stock retrace a little. The real question is whether the fundamental business performance can justify the strong increase over the long term.
Jumia Technologies isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year Jumia Technologies saw its revenue shrink by 13%. This is in stark contrast to the splendorous stock price, which has rocketed 398% since this time a year ago. It's pretty clear the market isn't basing its valuation on fundamental metrics like revenue. While this gain looks like speculative buying to us, sometimes speculation pays off.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
If you are thinking of buying or selling Jumia Technologies stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Jumia Technologies shareholders should be happy with the total gain of 398% over the last twelve months. Unfortunately the share price is down 21% over the last quarter. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. It's always interesting to track share price performance over the longer term. But to understand Jumia Technologies better, we need to consider many other factors. To that end, you should be aware of the 3 warning signs we've spotted with Jumia Technologies .
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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