Wall Street’s Silence Is Deafening as Citron Takes Aim at the Amazon of Africa
(Bloomberg) -- It’s all quiet on Wall Street when it comes to Citron Research founder Andrew Left’s latest target, e-commerce company Jumia Technologies AG.
After a report from the short-seller stoked a 19% decline on Thursday, Wall Street analysts were nowhere to be found to pound the table and defend the company that has been dubbed the Amazon.com Inc. of Africa. The slump continued Friday with shares erasing a fifth of its market value in that session alone.
The sell-side silence stands in stark contrast to the typical response from the big banks that cover some of Left’s most recent targets. When Citron cautiously mentioned Chegg Inc. in March, saying the stock “could be a 0,” analysts including Jefferies Brent Thill ripped the commentary as silly.
The same thing happened when Left called Ligand Pharmaceuticals Inc. a “pipe dream,” with some banks defending the company within 24 hours of the report. But criticism of pot stocks including Cronos Group and Tilray Inc. in late 2018 was largely ignored by investors as shares continued to climb.
To be sure, six of seven Wall Street analysts tracking Jumia rate it at the equivalent of a hold, albeit with a price target 73% above today’s level. Prior to the latest seven-day slide that’s cut Jumia’s market value in half, the stock was up more than 220% so far in 2019.
The company’s lone bear is from Morgan Stanley, a bank that helped underwrite its IPO. Morgan Stanley’s Brian Nowak cautioned investors earlier this month that the stock’s current valuation “under appreciates risks/uncertainties.”
It’s worth noting that scarcely covered Citron targets like Village Farms International Inc. were also largely left out to dry by banks that helped it go public. Citron disclosed its short position in the company last month with a $1 price target, but the stock is only lower by 3.4% since the position was announced.
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