What is Jumia Technologies?

Tagged the ‘Amazon of Africa’ Jumia is a Nigeria-based e-commerce company. With over 40m listed products, the firm sells to an enormous African market of over 1.2bn consumers. The firm’s business model consists of four parts: JumiaPay, Jumia Marketplace, Jumia Travel, and Jumia Food. Having such an extensive portfolio of products is one of the things I like about it.

The African e-commerce market has seen an explosion in growth during the last five years as more and more countries are expanding internet capabilities. Analysts have projected e-commerce could be worth $75bn in leading African economies by 2025. Jumia seems to be harnessing this momentum, reporting a 50% rise in transactions during the first six months of 2020. Its stock price is likely to directly benefit from the increasing e-commerce presence in Africa. 

Still no profit

One problem that has haunted Jumia since its 2019 IPO is its losses. In its 2021 Q1 results, the firm announced operating losses of $41m. These are largely reflective of its ongoing infrastructure building to keep up with a growing consumer base. This gives the firm a temporary excuse for excessive losses. However, as a nine-year-old company, I would hope this investment would lead to some profits in the next few years.

In addition to this, there are still problems with the lack of internet infrastructure in much of sub-Saharan Africa. The International Telecommunication Union estimates that just 28.2% of individuals use the internet there. This could severely curtail Jumia’s capabilities as well as its stock price.

Future prospects for Jumia Stock

Alphabet‘s Google is one big-hitter that’s looking to capitalise on Africa’s extensive population growth. Through its Loon and Taara projects, the business is developing super-fast internet speeds through invisible light beams transmitted at high altitudes. Google has picked Africa as a target for this project and operations are already kicking off in Kenya. Facebook has announced a similar project to connect 23 countries in Africa and the Middle East to Europe via a 37,000km long undersea cable.

Projects like these will massively increase Jumia’s reach, and will no doubt add millions of new customers to the internet-based business plan.

Jumia: a buy now?

I like the current price of Jumia stock. Though it has taken a drastic tumble from its February highs, I believe this marks a good value buy opportunity. While there are certainly some short-term profitability hurdles that need to be overcome, I own Jumia shares as I believe it’s in a position to capitalise on the rapidly growing African market.

The post Does Jumia stock have long-term potential? appeared first on The Motley Fool UK.

However, a rise in US bond yields has caused a large-scale tech stock sell-off. Rising yields are a key indicator of inflation, which erodes the future value of company earnings.

Though this may cause concern for investors, I’m taking advantage of cheaper share prices to top up on three US tech stocks I already hold.

#1. Palantir Technologies: data analytics

Palantir Technologies (NYSE: PLTR) specialises in data gathering and analytics. Its share price peaked at $39 in January 2021, up from $9 in October 2020.

The company offers three different data services, Gotham for governments, Foundry for corporate firms, and Apollo, which manages the two. Its Gotham government contracts provide a stable long-term income. In 2020 the company saw 47% revenue growth to $1.1bn, with 2021 forecasts expecting a similar figure.

However, the current price-to-book (P/B) ratio is around 28, signalling this stock could be overvalued. This is a risk for any investor buying now. For context US tech stock Microsoft trades on of P/B ratio of around 13. However, data collection is only going to accelerate in coming years, as the world increasingly shifts towards technological dependence. Therefore, I expect this stock to have a strong future and will buy more.

#2. NIO: Chinese electric travel

NIO (NYSE: NIO) is a Chinese electric car manufacturer. Its share price surged over 1,100% in 2020. Though the shares are down, this US-listed tech stock does boast some encouraging numbers. One example is the 113% year-on-year increase in production in 2020. It also has a much lower P/B ratio of 13.4, compared to industry leader Tesla’s 28.3. This indicates the current share price could be undervalued comparative to the industry giant.

However, if this US tech stock wants to become a front runner in the electric vehicle industry it will have to fend off some fierce competition, which is a risk that can’t be ignored. Ford has pledged $11bn for electric vehicle research from 2018-2022 and General Motors has set aside as even larger $27bn.

However, as a current investor I’m bullish about this US tech stock’s future growth. I’ll be buying more shares for my portfolio.

#3. Jumia Technologies: African e-commerce

Often referred to as “the Amazon of Africa”, Jumia Technologies (NYSE: JMIA) is a Nigerian e-commerce company. After its IPO in April 2019, this stock suffered some huge cash flow issues with operating losses exceeding revenues. However, throughout 2020 its share price exploded from just under $3, to peak at $65 per share in early February 2021.

With Africa’s lack of infrastructure, e-commerce has been largely overlooked as a viable business plan. Google owner Alphabet and Facebook are two US tech stocks that have announced plans to provide all of Sub-Saharan Africa with internet connections. If these projects are successful, I feel it would put Jumia in a great spot. Jumia’s conservative $4bn market cap also offers room for encouraging upside potential. I’m bullish about this US tech stock’s potential and, again, I’m going to add to my existing holding.

The post Why I’m buying these 3 US tech stocks today appeared first on The Motley Fool UK.