The mass mobility startup SWVL, which was founded in Egypt and is based in the UAE, is preparing for drastic monetary austerity measures and organisational restructuring. Over the past few weeks, it has initiated significant layoffs across some of its markets, and more staff members are anticipated to leave the company in the near future.

The majority of these layoffs affect the SWVL team in the nation where it was founded. Former employees are requesting employment opportunities on social media, sending their CVs to Whatsapp groups, and organising virtual events to help link impacted workers with prospective employers.

The recent round of layoffs apparently also affected the company’s personnel in Pakistan and Dubai in addition to Egypt. An ex-employee of SWVL who wished to remain anonymous claims that staff members from numerous departments, including the tech and HR teams, are among those being let go.

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“Up until a few days ago and before we were notified about the cuts, all departments were functioning normally. So far, no one knows what will happen next,” they said.

The NASDAQ-listed corporation has not yet disclosed the precise number of affected employees.

This is SWVL’s second round of layoffs after announcing plans to eliminate 32% of its workforce in May with the goal of “accelerating its path to profitability to turn cash flow positive in 2023.”

SWVL went public on the US NASDAQ in March of this year through a SPAC merger with Queen’s Gambit Growth Capital at an initial offer price of $9.95 per share. At the time, the company had a value of $1.5 billion. But after failing to make a profit across all of its markets, the company found it difficult to hold onto its initial share price. In just six months, the value of the company has fallen precipitously from $1.5 billion to $53 million, a nearly 95% decline in share price.

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“There have been deliberations between the top management, investors as well as the board of directors going on for some time. There has been increasing pressure on the top brass to focus on profitability in order to be able to regain the minimum bid stock price to $1 per share,” added the source.

SWVL got a letter from NASDAQ on November 4, 2022, stating compliance difficulties due to the company’s shares trading below $1 for more than 30 straight days. As a result, it is currently in danger of being delisted. SWVL’s stock is currently trading at $0.44, up $14 annually from its previous close.

However, SWVL also disclosed in October that operations in 50% of the markets it broke even or turned EBITDA positive in August 2022.

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“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.

In October of last year, SWVL announced the introduction of clean mobility solutions in Switzerland, bringing the total number of markets it serves to over 18 in Latin America, Europe, Africa, and Asia.

In terms of acquisitions, SWVL has recently acquired the mass mobility startup Urbvan from Mexico, the B2B mobility startup Voltlines from Turkey, the German mobility software startup door2door, the Argentine startup Viapool, and the shuttle booking startup Shotl from Spain.

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The company’s consolidation and expansion drive, for which it has conducted extensive hiring drives over the previous few years, may also be the direct cause of these layoffs. Many have questioned the enormous expenses associated to these expansion plans and the company’s constant overhiring and high burn rate due to SWVL’s unrelenting pursuit of growth and expansion.

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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. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh