Jumia investors are rethinking their stakes – for better and for worse

Baillie Giffordthe Edinburgh-based asset management company long known for having a penchant for pre-IPO tech companies, has cut its shares in African e-commerce giant Jumia, according to the latest Filing 13G/A issued by the asset manager.

According to the filing, Baillie Gifford disclosed ownership of 18.75 million shares of Jumia, representing 9.39% of the company. In Jumia’s previous filing from a year ago, the asset management company held 19.85 million shares, owning 10.06% of the company at the time. This represents a 5.50% decline in stocks and a 0.67% decline in ownership.

The Scottish asset management firm, well into its centenary years, was an early backer of well-regarded private and public tech companies such as Amazon, Google, Salesforce, Tesla, Airbnb, Spotify, Lyft , Palantir and SpaceX. He has also invested in deals in other geographies, including China’s Alibaba and NIO, and Africa-based internet companies Naspers and Jumia.

Baillie Gifford bought Jumia shares in 2019, three years after the e-commerce giant went public. The Scottish Mortgage Trust Company, which is the subsidiary of Jumia leading institutional investor, has sold and repurchased portions of its shares every January since then, with the recent move being its biggest stock drop to date. Baillie Gifford remains the largest shareholder of the e-commerce platform.

Last November, after several years of reporting losses, Jumia made some leadership changes after appointing Francis Dufay as interim CEO to replace co-founders Sacha Poignonnec and Jeremy Hodara, who resigned of their roles as co-CEOs. The move was accompanied by instant cuts in various product lines and layoffs, including the dismissal of a few executives from its Dubai office. All this to chase the profits that have eluded the company.

In the third quarter of 2022, the African e-tailer made considerable progress by reducing its losses by 13%, from $52.5 million to $45.5 million, its lowest level in six quarters. Despite this progress, public confidence in e-commerce equipment appears to have declined. Jumia has seen its share price drop 51% in the past year and saw its stock drop to $3.88 per share after Wednesday’s news; it trades slightly above $4 with a market capitalization of $404 million. The online retailer closed the third quarter with a cash position of $284.7 million, including $104.3 million in cash and cash equivalents.

Baillie Gifford’s decision to sell some of his shares could be linked to Jumia’s performance on the stock market. On the other hand, it could be a way for the investment firm to pare the mounting losses it began to suffer last year, particularly around growth stocks, which have taken a heavy hit in the face. rising interest rates and fears of recession (last week the investment group admitted that 2022 was a “humbling year” after losing more than $14 billion on stakes in Tesla and Shopify, according to FinancialTimes). Still, that doesn’t explain why the fund group, with more than $230 billion in assets under management, has increased its position in other loss-making companies, such as Chinese electric vehicle maker NIO and Wix.com. , last week. Jumia’s upcoming earnings call next month should shed more light on the matter.

It’s not all bleak for Jumia, however, as other major shareholders including DE Shaw, Goldman Sachs and Bank of America have taken a different route and increased their shares in the company, holding 2, 21%, 1.27% and 1.40%, per Nasdaq.

Comments are closed.