Top African e-tailer, Jumia recently shared its, Q2, second-quarter 2020 results disclosing that it will pay $5 million in settlement to get out of the lawsuits that trailed it after its 2019 IPO. Jumia allegedly had irregularities in some numbers in its report around the time of its enlistment at the NYSE.
There were links to securities fraud in its IPO and the claims implicated former members of its administrative boards. Various class-action lawsuits filed in the U.S. District Court for the Southern District of New York and the New York County Supreme Court followed.
In the litigation update section of Jumia’s report, it states that “On August 11, 2020, we reached an agreement to fully resolve all of the actions, subject to standard conditions including court approval.”
Jumia Allegations and Lawsuits
An internal fraud which was impelled by improper placements from its JForce sales agent network in Nigeria was the backdrop of the allegations and subsequent lawsuits. This action gave its gross merchandise volume (GMV) a value of $17.5 million in the last quarter of 2018 and Q1 & 2 of 2019.
Jumia admitted to facing lawsuits but not to any liability or wrongdoing according to its statement. “Under this agreement, in which the defendants do not admit any liability or wrongdoing, Jumia will make a settlement payment of USD 5 Mn, USD 1 Mn million of which will be funded by insurance coverage.”
Jumia Shares
Jumia shares which raised lots of concern is on the rise again. This is after its efforts to mitigate losses and win back confidence. The giant had to drop a number of less productive markets and discarding its vertical markets. It further launched a business mix rebalancing effort using new methods and new verticals.
Jumia Q2 Report
Having said that its financial statements were not affected by the fraud, its latest report appears to say the same. In its Q2 2020 report, (GMV) is at €228 million a 13% lag in comparison to same time 2019.
The company also saw a decrease of 44% year on year to €37.6 million in operating losses. With annual active consumers reaching 6.8 million in the quarter ended June 30, 2020. This a 40% year/year increase as orders rose to eight per cent year/year growth to 6.8 million.
Follow us on Facebook and Twitter and send us stories on contact@africareinvented.com