In recent months, Jumia $JMIA (+0,25 %) Technologies (JMIA) has made an impressive recovery from its lows - and this is no coincidence. The African e-commerce company has undergone a fundamental transformation that not only justifies the current rally, but also opens up the potential for a massive re-rating over the next two years.
1. focus on profitability instead of growth mania
After Jumia $JMIA (+0,25 %) had been struggling with losses for years, the business model was fundamentally revised. The new strategy: reduce costs, expand high-margin segments and close unprofitable business areas. For several quarters in a row, Jumia was able to $JMIA (+0,25 %) was able to significantly reduce its operating losses - a trend that gives investors hope for profitability in the near future.
2 Africa as the growth market of the future
While the major e-commerce markets in the USA, Europe and China are already heavily penetrated, Africa is at the beginning of its digital transformation. The smartphone is the key to the digital economy there. Jumia is excellently positioned to benefit as a first mover from the huge growth potential in Africa - with over 1.4 billion people, a market that has barely been tapped into.
3. improved logistics and partnerships
Jumia $JMIA (+0,25 %) is making targeted investments in its logistics infrastructure and at the same time entering into strategic partnerships with local companies. This allows the delivery service to be extended to remote regions, which increases customer satisfaction and loyalty - a decisive competitive advantage.
4. market psychology & short squeeze potential
The share was heavily short-sold for a long time. However, with the operational recovery and positive newsflow, a rethink is beginning. A short squeeze is possible if further positive quarterly figures are released. Institutional investors are returning, while retail traders are rediscovering the story.
5. valuation remains attractive
Despite the price rally, Jumia $JMIA (+0,25 %) remains significantly undervalued in terms of the addressable market, future cash flow potential and the platform multiple. With continued operational improvement, the share price could multiply in the next two years - and at a fraction of the valuation of comparable international platforms.
