Why Jumia Technologies Stock Sank Today

Jumia (NYSE: JMIA) stock saw a big pullback in Wednesday's trading despite bullish momentum for the broader market. The company's share price fell 5.6% in the daily session. Meanwhile, the S&P 500 and the Nasdaq Composite rose 0.4% and 0.9%, respectively. The stock had been down as much as 10.5% earlier in the session but regained ground as the day progressed.

While Jumia stock saw big gains yesterday despite bearish momentum shaping the stock market, it saw a big sell-off today even as investors took fewer risk-averse positions. The company's valuation surged yesterday thanks to a report that a buyout could be in the works, but shares moved lower today as investors weighed the news and looked deeper into reports the business could be acquired.

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Jumia stock pulls back after buyout reports drove a pop yesterday

Reports hit the wire yesterday that Axian Telecom was potentially looking into acquiring Jumia. Bloomberg stated that Axian had raised $600 million in funding to improve its debt positioning and have the cash on hand to make a buyout play for the African e-commerce specialist. The news prompted a big rally for Jumia stock, but shares pulled back today as investors took profit and weighed the risk that a buyout may not emerge in the near future.

What's next for Jumia?

Last quarter, Jumia's revenue fell 26% year over year to land at $36.3 million. On a currency-adjusted basis, sales were down 18% compared to the prior-year period. Meanwhile, gross merchandise volume (GMV) conducted through the company's platform fell 11% year over year to come in at $161.7 million.

Despite the weak first-quarter performance, Jumia expects that its full-year GMV will come in between $795 million and $830 million -- good for annual growth of 12.5% at the midpoint of the guidance range after adjusting for currency fluctuations. While it's possible that the business will be able to hit that forecast, there's also a significant risk that performance will fall short of that target range. With the core business showing signs of softness, Jumia stock's near-term performance outlook could be heavily shaped by the outlook on whether or not the business is acquired.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.