Picture: REUTERS
Picture: REUTERS

Jumia Technologies may have weathered a short-seller’s attack, with the stock incurring huge losses after Citron Research accused the African e-commerce firm of being a fraud, but the damage has been done.

It’s a startling story, not least because Jumia was painted as Africa’s most successful e-commerce business when it listed in New York last month. It’s also important for SA investors, as mobile operator MTN owns 29% of it.

But Jumia has endured a horrid week, dropping by almost 50% since listing on the NYSE. Only now are analysts coming to Jumia’s defence, punching holes in Citron’s report, which accused Jumia of lying in its IPO documents.

Citron’s founder, Andrew Left, is apparently prone to making "false and misleading claims" about companies he has shorted, which earned him a five-year ban from trading in Hong Kong in 2016. According to Reuters, the Hong Kong Market Misconduct Tribunal ordered Left to pay a $206,000 fine for shorting China’s Evergrande Group.

While activist short-sellers are an acceptable and useful part of the market, the question is whether the authorities in the US are turning a blind eye to "short and distort" tactics, where market prices are driven down to make a buck, based on lies. If this is what happened to Jumia, Left should be called to account.