Why Jumia Stock Is Plummeting Today

Jumia (JMIA -27.97%) stock is getting crushed in Thursday’s trading. The e-commerce company’s share price was down 29.5% as of 10:15 a.m. ET amid a 0.8% decline for the S&P 500 (^GSPC -0.72%) and a 0.7% decline for the Nasdaq Composite (^IXIC -0.75%).

Before the market opened this morning, Jumia published its fourth-quarter results — and Wall Street was not happy with the print. In addition to posting Q4 sales that missed the market’s expectations, the online retail specialist also issued forward guidance that disappointed investors.

Jumia stock plummets on Q4 sales miss and big GMV decline

Jumia posted a loss of $19.5 million on revenue of $45.7 million in the fourth quarter. While the loss for the period was roughly in line with the market’s expectations, sales fell roughly $4 million short of the average analyst estimate. Making matters worse, the business reported a substantial decline in gross merchandise volume (GMV) in the period, with total transaction value across its platform falling 12% year over year to $206.1 million.

What’s next for Jumia?

For this year, Jumia is guiding for its GMV to come in between $795 million and $830 million — representing a year-over-year increase of 12.5% at the midpoint of the guidance range. The company says that it’s seeing some encouraging trends in the current quarter, and it expects that physical-goods orders will increase between 15% and 20% year over year.

On the other hand, the company forecasts a net loss before income taxes between $65 million and $70 million. While the midpoint of that guidance range suggests a 30.5% reduction for the business’s pre-tax losses, it’s still burning cash — and investors seem to be losing faith in the company’s growth story. Jumia did close out the fourth quarter with $133.9 million in cash and equivalents, so it’s not under immediate pressure to raise new funding this year, but it’s likely that the business will sell new shares or take on new debt in the not-too-distant future.