Why Jumia Stock Plummeted Today

Jumia (NYSE: JMIA) stock took a hit on Tuesday. The African e-commerce company's share price fell 15.8% in a day of trading that saw the S&P 500 decline 0.4% and the Nasdaq Composite sink 0.6%.

Jumia published its fourth-quarter results before the market opened this morning and reported sales that came in ahead of Wall Street's expectations. On the other hand, the business posted a wider-than-anticipated loss.

Jumia misses Q4 earnings expectations

Jumia managed to grow revenue 34.4% year over year to hit $61.4 million in the fourth quarter, beating the average analyst estimate of approximately $60.66 million. Despite the sales beat, Jumia's loss for the quarter came in higher than anticipated. The business posted a loss of $0.08 per share in the period, exceeding the average analyst estimate's call for a per-share loss of $0.05.

What's next for Jumia?

Even with today's valuation pullback, Jumia stock is still up approximately 159% over the last year. The company now has a market capitalization of approximately $1.27 billion and is valued at approximately 5.2 times this year's expected sales. k

Given Jumia's recent sales growth rate, the company could appear undervalued on a price-to-sales basis. On the other hand, the company has an uneven growth history -- and concerns remain about the business's ability to shift into delivering reliable profits.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.