Citi Group addresses fraud allegations against Jumia by Citron Research Analysts

Jumia Technologies  investment bank Citigroup Global Markets Inc has responded to fraud allegations levelled against the e-commerce company by a research firm, Citron Research.

Citi Group in its analysis of the allegation said claims by Citron were manipulated and recommended that Jumia make more disclosure of its performance.

The investment bank said it had become necessary to address the issues in view of the 50 per cent fall in the share price of Jumia at the New York Stock exchange and investors’ concerns over the validity of the allegations.

Citron research analysts led by its Founder, Andrew Left, had claimed a document called ‘Confidential Investor Presentation’ published by Jumia in October 2018, which was used for marking the company before the IPO, contained key financial metrics that were different from the Jumia filing with the NYSE.

The US Based online investment  Citron Research Newsletter has declared E-commerce giant Jumia shares as worthless and that they had never “seen such an obvious fraud”. Jumia share price was down by over 18% as at closing of trading at the New York Stock Exchange.

Citron said it received a copy of the Confidential Investor Presentation Jumia sent to investors in October 2018 and claims that the information contained therein is different from what was presented to the US Securities and Exchange Commission in April.

It claimed that Jumia reported a rise in active consumer numbers from 2.1 million in October investor presentation to 2.7 million by April while active merchants moved to 53,000 from 43,000 during the same period.

“The most disturbing disclosure that Jumia removed from its F-1 filing was that 41% of orders were returned, not delivered, or cancelled. This was previously disclosed in the Company’s October 2018 confidential investor presentation,”

“Instead, Jumia disclosed that “orders accounting for 14.4% of our GMV were either failed deliveries or returned by our consumers” in 2018.

“Assuming 41% of orders were returned, not delivered, or cancelled in 2018, this implies that almost 30% of orders were cancelled in 2018.

“Since Jumia primarily sells consumer electronics, which should not have this high of a cancellation rate, it wreaks of fraud.”

 

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