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Is JMIA Stock a Solid Long Term Investment?

Stock Market

Are you looking for something that you can use as a long-term stock market investment in order to make your portfolio more profitable in the long run? If you are, then you might be interested in at least taking a look at a company called Jumia, traded publicly as JMIA. If you're not familiar with them, they are a Nigerian-based company that deals with different types of online companies ranging from fashion to electronics and practically everything in between. The thing that makes him stand out is that almost all of the businesses that they deal with are owned and operated by people of color. In fact, most of those businesses are located in countries which are primarily African-based.

The Hook

There's no doubt about it, the very idea of using a company like this as a long-term investment option is an interesting one in and of itself. A lot of companies are looking for something that makes them unique these days, but the overwhelming majority of them tend to miss the mark. As a result, most of them end up doing some type of marketing gimmick in hopes that they will suddenly become more memorable within the minds of the general public. This company actually stands out because it really is different. Their goal is to help black people succeed in business by giving them an online platform from which to sell their goods. That's been their goal since the day they were founded, which was back in 2012. It's also worth noting that while they were founded in Lagos, Nigeria their current headquarters is located in Berlin, Germany. If you're looking for some kind of information about the size of the company itself, they currently have more than 5,000 employees. Obviously, they know how to stay in business, as they've been doing it for 10 years now. In addition, there is no way they could have possibly grown their business to have so many partners, associates and employees if they didn't know a thing or two about being successful. That's one of the most important things when it comes to deciding whether or not to invest in something in the stock market. You have to know if the business has staying power. If it does, then you can start looking at other factors that might give you a better idea of whether or not it would be a good fit for you to purchase that particular stock.

Looking to the Future

There is no doubt about it, this company has seen more than its fair share of adversity, something that it shares with a lot of other companies that have struggled to keep their heads above water after roughly two years of being plunged into a pandemic. The company's most recent struggles are something that has a tendency to make a lot of would-be investors think twice about the prospect of using them as a long-term investment. However, there are plenty of individuals that specialize in looking at long-term investments for the stock market who still feel like this company has a great deal to offer. Some of them are happy to go on record saying that they believe that the company has real potential as a long-term investment, even if their most recent quarterly earnings fail to reflect that train of thought. There are a couple of different reasons that a lot of people have really gotten behind this company. First and foremost, they have a significant presence among people of color all over the world. Think about it this way. Instead of going to Amazon or Etsy to order something online, many people of color instantly go to Jumia as a means of supporting a business that supports their own ideals. That's a significant part of the population and it's something that has to be factored into your decision when it comes to deciding what's best for you as a long-term stock option. As previously mentioned, it's already been proven that the company has more than enough staying power to stay in the game, despite things that may present challenges for them. The truth of the matter is that they're not just hanging by a thread. Granted, their most recent quarterly earnings don't reflect huge gains and in some cases, they've lost some footing. That said, so has practically every other company out there over the course of the last two years. The truth of the matter is that they have a dedicated customer base that will continue to turn to them time and again when ordering online. That's not something that should be overlooked in the slightest.

Setting the Course for Success

As previously mentioned, this is a company that not only has a dedicated customer base, but the trust of almost an entire continent. As a matter of fact, many people would argue that they are just as much the go-to company for online purchases throughout all of Africa as Amazon is for the United States or the United Kingdom. That's not exactly something to be taken lightly. In fact, it's something that's actually worth exploring further. That's because the company is setting themselves up for long-term success by dedicating themselves to doing the best job possible for an entire continent of individuals that is expected to more than double within the next few years. Africa is growing very rapidly. As such, it would only be reasonable to expect that this company will continue to grow right alongside it. They already have a presence there and they're very well established as the company that people automatically want to utilize whenever they're ordering something online, regardless of what that particular product might actually be. As a result, it only stands to reason that the company will continue to grow exponentially as more and more people come into the continent.

Solid Growth or Cause for Concern?

As a matter of fact, there are some stock market experts that fully believe that the company will be capable of overtaking major companies like Amazon within the next five years. That may seem a little ambitious to some individuals, but there is every chance that they can at least compete with them, going head-to-head with a company that up until recently, many people felt was practically invincible. True, the company has struggled recently. That is something that causes concern for some investors because many people started to ask questions about why a company that specializes in online sales would struggle during a pandemic when other companies such as Amazon (one of their main competitors) is seeing their sales soar because people don't have to get out in order to buy their products. That's a fair question. The important thing to remember is that while Jumia sells a number of different products, they haven't quite moved into the realm of selling basic, everyday goods like Amazon has. They're definitely getting there, but the thing that might have tripped them up during the pandemic was that when people couldn't get out and work as they had done in the past, they started to buckle down. That provides a legitimate reason for why sales slipped during that particular time.

Tackling Obstacles

Granted, there have been some issues specific to this particular company that have caused them some problems in the past. For example, they have struggled with getting products to customers in a timely fashion. That is undoubtedly part of the reason why they had fewer sales over the course of the last year or two, along with the fact that practically everyone took a direct hit because of the pandemic. The good news is that they are keenly aware of their issues when it comes to logistics and shipping. They're not just standing by watching it all happen, either. In reality, they're consistently taking very real steps to address those issues and make sure that they don't continue to be problems in the future. This is good news because it means that individuals who have chosen not to utilize their services in the past will likely rethink things in the future, especially as the company grows and becomes even more of a force to be reckoned with. They definitely have a wide range of products available for purchase and aside from their issues with shipping and logistics, their customer service is fairly solid. Once they get those issues out of the way so that customers are consistently getting their orders faster with fewer problems, there is almost no reason not to do business with them, provided you are in a geographic area that allows you to do so.

Problems Ahead?

Some investors are not convinced that this is a solid long-term investment option for one reason and one reason alone. The company's performance over the course of the last three months hasn't exactly been stellar. In fact, they have lost approximately 60% of the profits that they gained after they rebounded from the pandemic. This fact alone causes some people to reconsider the prospect of using them as a long-term investment. When looking at how they rebounded from the pandemic, it becomes a little easier to see why some people are questioning things here. That's largely because they rebounded somewhere to the tune of 1,500% and then within the course of the last three months alone, they've lost more than half of that. People are wondering why they are actually seeing losses when other companies are starting to come out of the red, even those who weren't particularly capable of pulling themselves out previously. That's a question worth asking because it could potentially signal some type of systemic problem that isn't likely to go away. The only way to find answers is to dig a little deeper.

Change on the Horizon

As it turns out, there are a number of reasons that the company hasn't performed particularly well in the stock market as of late. If you really dive into both their history and their business practices, you will see that they are currently experiencing a lot of changes. Traditionally, they have focused more on products that people typically only buy once in a while, such as electronics. Without a doubt, the product line that people are most likely to keep coming back for again and again is apparel. The problem is, most people don't tend to buy an entirely new wardrobe every few months. That more or less left the company out in the cold when it came to experiencing significant gains on a quarterly basis. Currently, they're transitioning from selling these types of products to other things that people use more consistently such as food and cleaning supplies. While they still plan to offer everything that they always have in the past, they're becoming much more akin to their brethren, Amazon, by offering more products that are used on a daily basis. This will undoubtedly mean that more people are purchasing items from them more frequently. In return, these changes stand to have a positive impact on their bottom line, not to mention impacting those individuals who choose to buy their stock now and hold on to it for the long term.

In order to recap, it's vitally important to remember that just because a stock isn't performing particularly well right now, doesn't necessarily mean that it isn't capable of performing exceptionally well in the future. It's true that this company has watched their stock take a real beating over the course of the last several months, but that doesn't mean that things are likely to continue in that manner. As a matter of fact, the company stands to start making significant financial gains within the next one to three years. Even more impressive, many stock market analysts believe that the company could genuinely outperform itself within the next five years. In short, this may be one of the best long-term investment options that you'll ever see, despite the fact that past performance might seem to indicate otherwise at first glance. As a result, it's probably something that's worth some serious consideration on your part, especially if you're looking for a long-term investment that has real capability to deliver a solid payday.

Allen Lee

Written by Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Read more posts by Allen Lee

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