Swvl Holdings Corp, an Egypt-born provider of tech-enabled mass transit solutions, has again received a notice from The Nasdaq Stock Market stating that it is not in compliance with Listing Rule 5450(b)(2)©, which requires companies listed on the Nasdaq Global Market to maintain a minimum market value of publicly held shares of $15,000,000. 

The company has until September 25, 2023, to regain compliance by ensuring that the minimum market value of publicly held shares must close at $15,000,000 or more for a minimum of 10 consecutive business days prior to the Compliance Date. Failure to do so would result in delisting, which could lead to a loss of confidence among investors.

On November 4, 2022, Swvl first received a notice from NASDAQ that it was not in compliance with Listing Rule 5450(b)(2)©. This was due to the company’s shares trading for more than 30 straight days below $1.

read also SWVL Lays Off More Staff As It Risks Nasdaq Delisting

When SWVL received its first removal warning from Nasdaq in November 2022, the company responded by approving a reverse stock split of its Class A ordinary shares. This split was approved by the company’s Board of Directors at a ratio of one-for-25, which meant that every 25 issued shares would be combined into one share with a par value of $0.0025 each. The company also restated its articles of association and revised them to reflect the reverse share split, which did not require any shareholder permission according to the British Virgin Island’s Business Companies Act, where SWVL was registered

The reverse share split took effect on January 25, 2023, after which SWVL’s ordinary shares started trading on the Nasdaq Global Market on a split-adjusted basis from January 26, 2023.

Swvl provides intercity, intracity, B2B, and B2G transportation services, offering semi-private alternatives to public transportation for individuals who cannot afford private options. The company’s parallel mass transit systems aim to make mobility safer, more efficient, accessible, and environmentally friendly. Customers can book their rides using a proprietary app with various payment options and access to high-quality private buses and vans.

The notice from Nasdaq is a significant development for Swvl, as failure to regain compliance with the minimum market value requirement could lead to delisting and a loss of confidence among investors. While the company has 180 days to regain compliance, it will need to take prompt action to address the issue.

read also Why Is Egypt’s Leading Telco Freezing Customers’ Mobile Money Accounts, All Of A Sudden?

Swvl has stated that it intends to actively monitor its minimum market value of listed securities and may consider implementing available options to regain compliance. The company may also choose to transfer the listing of its ordinary shares to The Nasdaq Capital Market. However, there is no assurance that the company will be able to regain compliance or maintain compliance with any other listing requirements.

When securities are delisted from an exchange, it means that they are no longer available for trading on that particular exchange. This typically occurs when a company fails to meet the listing requirements or violates the exchange’s rules and regulations. Delisting can also occur voluntarily, when a company decides to move to a different exchange or go private. Once a security is delisted, it can still be traded over-the-counter, but liquidity may be reduced, and investors may face difficulty finding buyers or sellers. Additionally, delisting can have negative implications for a company’s reputation and investor confidence.

Swvl transport Nasdaq Swvl transport Nasdaq

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

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