Why Jumia Technologies Rallied 16.2% in November, Even During a Middling Month For Stocks

Shares of African e-commerce leader Jumia Technologies (NYSE: JMIA) rallied 16.2% in November, according to data from S&P Global Market Intelligence.

Jumia held both its third-quarter earnings report and a more long-term focused Investor Day during the month; yet both events, while delivering bullish numbers and narratives, didn't appear to move the stock initially.

Rather, it wasn't until a sell-side analyst greatly increased his price target on Jumia days later that the market came around, bidding up shares to its hefty one-month gains.

Jumia tells its story, but investors wait for Wall Street to jump first

Earlier in the month, Jumia delivered third quarter earnings results that appeared strong. The company saw revenue surge 25% to $45.6 million on a 21% increase in gross merchandise volume (GMV), while the company's operating loss narrowed by 13% to ($17.4 million).

Increasing revenues and improving bottom-line profitability is a positive sign, and management expects these good trends to continue. This is because Jumia has already completed a multi-year restructuring phase of its business, begun in 2022 and completed as of the first half of 2025. Management had been dissatisfied with overall profitability, especially as interest rates rose in 2022, and responded by exiting unprofitable geographies and product categories, slimming down corporate overhead, and restructuring logistics operations.

At Jumia's Investor Day, held the day after earnings, management gave longer-term targets that were encouraging. The company anticipates that, having cut costs and refined its focus, it can now grow in a more profitable way. Management anticipates Jumia becoming profitable and free cash flow-positive in 2027.

Furthermore, Jumia gave a longer-term outlook to 2030. Over that five-year span, management sees GMV growing at a 20% compound annual growth rate through the end of the decade, from $0.8 billion today to between $2.5 billion and $3.0 billion in 2030.

Jumia also believes it can do so with increasing profitability, first by increasing its "take rate" between two to two-and-a-half percentage points, through increasing what its charges third-party sellers and increasing advertising revenues. Along with that, Jumia expects various costs across fulfillment, marketing, and technology to fall as a percentage of revenue as the company scales over that time.

When all is said and done, Jumia sees its EBITDA margins increasing from the (34%) figure in the recent third quarter to a greater-than-20% EBITDA margin by the end of the next five years.

Image source: Getty Images.

However, neither earnings nor the Investor Day really moved Jumia's stock, which appeared to get caught up in November's profit-taking sell-off across the technology sector, especially for stocks that had already done well year-to-date.

It wasn't until Benchmark Research analysts greatly increased their price target on Jumia shares from $11 to $18 on November 25 that the stock took off, finishing the month strongly and leading to a 16.2% overall gain, even as the overall S&P 500 was up a mere 0.3% on the month.

Is Jumia still a buy?

Supposing Jumia achieves its 2030 target of $650 million in revenue with a 20% EBITDA margin, that would yield $130 million in EBITDA, relative to its current $1.4 billion market cap.

That would certainly seem cheap, but there's obviously a lot of execution that has to happen for a stock that has underwhelmed expectations since going public back in 2019, not to mention the time value of money for profits five years away.

All in all, Jumia has potential, but it's still a risky play given the geographies in which it operates, as well as its underwhelming history relative to other e-commerce leaders in other parts of the world.

Billy Duberstein and/or his clients have 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.