African e-commerce firm Jumia's shares plummeted 28% on Friday, wiping out $45.8 million from its market capitalization, which now stands at $285.2 million. The sharp decline was triggered by investors' concerns over the company's continued losses and exposure to macroeconomic instability, despite improved cost efficiency.

The company's revenue declined by 10% to $167.5 million in reported currency in 2024, with a 23% reduction year over year in the fourth quarter. Although Jumia's constant currency metrics show resilience, its decline in USD terms highlights its vulnerability to currency fluctuations. Analysts predict softer currency devaluation in Nigeria and Egypt in 2025, but investors typically discount growth that relies on favorable FX movement.

Jumia's widening losses also suggest that the company's infrastructure is still inefficient, with logistics costs increasing by 11% year-on-year. Global investors favor cash-generating businesses as interest rates rise, and the appetite for unprofitable businesses reduces. In 2024, a Goldman Sachs basket of unprofitable tech companies lost 20% of its value as the S&P gained, and Jumia's inability to turn a profit is placing downward pressure on the stock.

As Jumia exited countries, its active customers fell to 8.3 million compared to 10 million in the previous year. However, its customers' repurchase rate improved to 40%, signifying a stickier customer base. The company's orders also grew by 11% to 7.4 million in the fourth quarter. According to its SEC filing, Jumia has 2.4 million quarterly active users, a slight increase from 2.3 million in December 2023.

Jumia projects that its gross merchandise value (GMV), the value of goods ordered on its platform, will reach $795–830 million in 2025 (+10–15% year-on-year), but this assumes stable FX rates, which investors might consider unrealistic given Africa's macroeconomic headwinds and the company's 2024 misses. The company's GMV fell by 4% to $720 million in 2024 and 12% in the fourth quarter, primarily due to currency devaluations in Egypt and Nigeria, its two largest markets.

Jumia's expansion into second cities in 2024, which now accounts for 56% of its orders, also caused a shift towards lower-value orders. This expansion, combined with a decline in high-margin corporate sales in Egypt, contributed to GMV declines in reported terms. Until Jumia stabilizes its USD-denominated growth, reduces its losses, and shows a viable path to profitability, investor skepticism might persist, and today's 28% drop only reflects a sign of things to come.

The company's struggles to achieve profitability and navigate currency volatility have raised concerns about its long-term sustainability. As Jumia continues to grapple with these challenges, investors will be watching closely to see if the company can turn its fortunes around and regain their confidence.