Jumia Technologies (NYSE:JMIA), Peloton Interactive, Inc (NASDAQ:PTON) and Virgin Galactic Holdings, Inc (NYSE:SPCE) were high flying stocks at the beginning of 2021 both in terms of price and popularity.
Jumia, dubbed “the Amazon of Africa,” reached an all-time high of $69.89 on Feb. 10, 2021, Peloton soared to reach its all-time high Jan. 14 of that same year, while Virgin Galactic skyrocketed to a Feb. 4, 2021 52-week high of $62.80.
Market conditions have undoubtedly changed drastically from the bull market that ensued following the crash caused by the onset of the COVID-19 pandemic. The market bottomed on March 23, when the S&P 500 bounced off the $2191.86 level and soared almost 120% higher over the many months that followed to reach an all-time high of $4,818.62 on Jan. 4 of this year.
Jumia, Peloton and Virgin Galactic missed out on the last year of that bull run, and seemingly faded from the retail investor's mind. Now trading down 90%, 93% and 90%, respectively, from their all-time highs, hope of a full recovery may seem pointless.
Unfortunately for retail traders who are stuck holding these stocks at much higher prices, a return to green does look far off, especially for Peloton and Virgin Galactic, which also have fundamental reasons for their long and steep declines.
The hype around Peloton waned as COVID-19 restrictions were lifted and the population was able to return to the gym for exercise. A federal investigation into Peloton’s equipment only made matters worse after the death of a child and dozens of injuries were linked to the company’s Tread+ machine.
Virgin Galactic hasn’t fared much better. Although the company's inability to meet timelines and bring customers to space has eliminated the risk of death for would-be astronauts, the Richard Branson-owned spaceflight firm has been unable to bring in any meaningful revenues. Virgin Galactic may get a second chance at life if it can meet its new deadline to bring commercial operations in the first quarter of 2023.
Jumia, on the other hand, may have more hope, at least in the near-term, because the e-commerce company showed strong growth when it printed its first-quarter earnings on May 17. For that quarter, Jumia’s revenue increased 40% year-over-year, causing the stock to soar almost 20% higher that day on far-above-average volume.
From a technical standpoint, Jumia is also the strongest of the bunch, trading in a consistent uptrend on the daily chart.
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The Jumia Chart: Jumia reversed into an uptrend on May 12, when the stock reached a 52-week low of $4.47 and bounced. Jumia’s most recent higher high within the pattern was printed on Wednesday at $8.39 and the most recent higher low was formed at the $6.03 level on May 24.
- On Friday, Jumia was working to print a possible morning star candlestick pattern, which could indicate higher prices will come on Monday.
- The morning star candlestick pattern is deceptive because a long upper wick usually indicates weakness, but paired with Thursday’s bearish Marubozu candlestick, the morning star candlestick indicates selling pressure is lessening.
- It should be noted the morning star candlestick pattern is a lagging indicator and Monday’s candlestick will need to print for verification. If the stock trades lower again on Monday, traders and investors can watch for a reversal candlestick to print above the most recent higher low.
- Jumia has resistance above at $7.79 and $9.56 and support below at $6.41 and $4.47.
Photo courtesy of Peloton.