Unusual Options Activity In Jumia Technologies
Founded in 2004, Facebook always had the mission of connecting the world to give people the power to build communities and bring the world closer together. In 2012 the number of monthly active users on Facebook crossed the 1 billion mark. In 2020, that number now stands at over 2.6 billion monthly active users. But Facebook isn't done yet because there are about 7 billion people in the world.
According to Internet World Stats, Africa has a population of 1.3 billion people, but an internet penetration rate of just 39% (versus an average rate of 59% for the whole world). So Facebook is partnering with several of the world's top telecom companies, such as MTN Group, Telecom Egypt, Vodafone and China Mobile to build a subsea internet cable to improve internet access across Africa. One of the companies to benefit from this initiative will be Jumia Technologies.
Jumia Technologies AG operates an e-commerce platform in Africa. The company's platform consists of a marketplace, which connects sellers with consumers logistics service that enables the shipment and delivery of packages from sellers to consumers and payment service.
There are emerging markets, and then there are frontier markets -- Jumia operates in the latter category. The company runs an Africa-focused e-commerce platform, along with a fintech service called JumiaPay. Jumia's stock has performed poorly since its April 2019 IPO, with share prices falling 68% from $14.50 to $4.60. But the battered company looks set for a long-term rebound because of its massive addressable market.
The African e-commerce market is projected to grow at a compound annual growth rate (CAGR) of around 17% until 2024, and this expansion will be driven by rising internet penetration on the continent. As much as 50% of internet users in South Africa and Nigeria purchase goods online, and as the internet becomes more accessible in these regions, e-commerce sales could potentially skyrocket.
Like every public company, Jumia crashed with COVID-19 kicked into full gear. But like every tech company, especially the e-commerce ones like Amazon, MercadoLibre and Sea Limited which has come back with vengeance, Jumia has been somewhat ignored. With 1.3 billion people in Africa, Jumia operating in 14 countries that make up about half of Africa’s population and with those countries representing three-quarters of Africa's GDP, investors are starting to take notice.
Amazon's net quarterly sales increased 40% year over year to $88.9 billion. Operating income increased 89% year over year to $5.8 billion. Net income doubled year over year to $5.2 billion. Operating cash flow jumped 42% year over year to $51.2 billion, while free cash flow increased 28% to $31.9 billion. And if that wasn't enough, For the third quarter, Amazon is forecasted net sales between $87 billion and $93 billion, representing growth of 24% to 33% year over year.
Jumia, the Amazon of Africa reports earnings this Wednesday. And the Smart Money thinks based on the numbers Amazon reported, Jumia's number are going to be blowout. I mean blowout to the point that the Smart Money bought over 20,000 call options at the $30 strike price that expires in two weeks.
We are talking the Smart Money is expecting price to jump 33% between now and when the options expire on Aug 21st. I had no choice, but to jump in with them. So I marked my calendars and will be grabbing my popcorn on Wednesday because I'm either going to lose $200 or make 500% on my investment.
This is a pure speculative play... if I saw the Smart Money buying options a bit further out, I would of been a lot more comfortable putting up $1000 on the trade. If the numbers turn out good and I see a nice return on my $200, I will probably just reinvest the profits back into the longer dated options.
But it's not just investors taking notice, it's the Smart Money that once a piece of the action.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted Using LeoFinance
