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Jumia, the Africa-focused e-commerce company, denied fraud allegations from an activist short-seller as its share price continued to fall in New York. Jumia listed in New York in April and initially saw its share price nearly triple before falling back in May.
On Friday, shares lost a quarter of their value after the short-seller Citron accused Jumia of fraud. In early trading on Monday, shares were down nearly 15 per cent at $20.86.
Sacha Poignonnec, co-chief executive and co-founder, said the company “completely stands by” the numbers it included in its initial public offering filings, which were questioned by Citron.
“We will not be distracted . . . by those who seek to create doubt to profit at our expense and that of our long-term stakeholders,” he said on an analyst call following the announcement of first-quarter results, which it had brought forward following the allegations.
Over the weekend, Jumia passed around a research note by Citibank that rebutted some of Mr Left’s allegations, but also said that the company needs to be more transparent about some of the issues raised, particularly whether active user numbers were inflated and about a related-party transaction involving one of its co-chief executives.
Citron is “just taking selected, biased and unverified facts [with] a very clear objective of damaging Jumia and that’s what I see,” said Mr Poignonnec to the Financial Times.
“And I’m sure certain people must be benefiting from that, and I guess that’s the way the world works and it’s just unfortunate.” Mr Poignonnec said the company debated how to address the allegations without feeding the publicity surrounding them, but ultimately decided it had to defend the business.
He said the discrepancies between a private investor presentation and its official filings that Citron claimed as evidence of fraud were actually an example of figures from different time periods, and in some cases describing different aspects of the business, being erroneously compared.
He said his co-chief executive Jeremy Hodara did not profit from the sale and repurchase of the company’s Tanzania business, another issue raised by Citron.
“Jeremy did not profit from these transactions,” he said. He said the company was “looking at our options”, including regulatory and legal options, in response to the allegations.
Andrew Left of Citron said that he welcomed an official challenge from the company. “There’s nothing that would make me happier — I’d walk into the SEC office tomorrow, me against Jumia,” he said.
Jumia, which operates in 14 African countries, reported a loss of €45.4m in the first quarter, against a €34.2m loss in the same period a year earlier. Revenues rose 12.3 per cent from a year earlier, to €31.8m. The company also announced a partnership with Mastercard for its payments system JumiaPay.