A transport startup founded in Egypt, Swvl Holdings Corp (SWVL) (Nasdaq: SWVL), is presently in risk of having its shares removed from Nasdaq, one of the top American stock exchanges. The share price of SWVL is presently $1.58, down from the price of $3.85 it reached on January 25, 2023, when the company’s share consolidation plan — under which each of the company’s 25 issued Ordinary Shares was consolidated into one Share — went into effect.
On November 4, 2022, SWVL received a notice from NASDAQ outlining compliance issues as a result of the company’s shares trading for more than 30 straight days below $1.
Nasdaq Rule 5450(a)(1) hinted that SWVL had failed to maintain its listing on the exchange because the closing bid price for its Class A ordinary shares (the “Ordinary Shares”) had been below $1.00 per share for the past 30 consecutive business days. As a result, the company was in the risk of being delisted.
Read also SWVL Lays Off More Staff As It Risks Nasdaq Delisting
With a SPAC merger with Queen’s Gambit Growth Capital and an initial offer price of $9.95 per share, SWVL went public on the US NASDAQ in March of this year. The corporation was worth $1.5 billion at the time. However the firm struggled to maintain its original share price after failing to turn a profit in any of its markets. The company’s worth plummeted from $1.5 billion to $53 million in just six months after its first public offering (IPO), a fall of about 95% in share price.
Yet, SWVL also revealed in October 2022 that operations in 50% of the markets it served in August 2022 either became EBITDA positive or broke even.
“The drop in the company’s valuation is no flash in the pan, considering that revenues are not going up,” said Ayamn Khalaf, a financial markers technical analyst.
“Similar to other tech companies, a state of lingering high inflation coupled with a slowdown in venture capital has complicated the situation for SWVL. But, I think the model itself is not working well for the startup. To cope with losses, they had to raise their prices. So for users in Egypt for example, the model is poorly suited for their needs and no longer a viable alternative for public transport. This has resulted in a fall in its customer base and thereby revenues. Besides, It has not been strongly validated in some of the markers they expanded to,” he added.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard