There are more troubles ahead for Jumia, an African-focused eCommerce company that was listed on the New York Stock Exchange last month.
A report by Citron, an intelligence equity research company said the Jumia’s initial public offering, IPO, was based on falsehoods.
Since the release of the report, stocks of Jumia has tumbled by more than 15% in less than 24 hours.
In the preamble to the report, Citron said:
“In 18 years of publishing, Citron has never seen such an obvious fraud as Jumia. As the media in the US is naively anointing Jumia the “Amazon of Africa”, the media in its home country of Nigeria has a plethora of articles discussing the widespread fraud in this Nigerian company. Not even that elusive Nigerian prince can cover this one up.
Jumia is the worst abuse of the IPO system since the Chinese RTO fraud boom almost a decade ago. Worse than being “the most expensive” US-listed e-commerce company, Jumia reported financials show us a stagnant business that has burned through $1 billion and has moved the sucker’s game to the US Markets.
In this report, Citron will expose the SMOKING GUN and show why the equity is WORTHLESS. We believe investors cannot rely on reported numbers and a restatement of financials is on the horizon. The SEC must protect US Investors.”
Based on Citron’s report, if the evidence presented is found out to be through, executives at the company could be indicted for securities fraud.
This is because Citron cited a confidential investor presentation that allegedly presented different figures to investors compared to the company’s filings with US Securities and Exchange Commission, SEC.
“Citron has obtained a copy of Jumia’s confidential investor presentation from October 2018 that was being used to market to investors late last year and is NOT what they told the SEC.”
“We will present some of many MATERIAL DISCREPANCIES in reported key financial metrics when comparing this confidential document with Jumia’s F-1 filing from last month.”
“When a company markets to investors ahead of its IPO and then a few months later omits material facts and makes material changes to its key financial metrics to make the business seem viable, this is SECURITIES FRAUD.”
Jumia has not officially responded to the research report as at the time of writing this report.