Swvl hit with a second Nasdaq delisting notice, will unwind Volt Lines acquisition
Swvl can’t catch a break: Cairo-born mass transport app Swvl received its second delisting warning from the Nasdaq after the market value of its listed securities dipped below the benchmark USD 50 mn, it said in a disclosure last week. The company has until 10 July to raise its market value to more than USD 50 mn for 10 consecutive days or else it will be delisted from the Nasdaq. This would require the company to more than double its current market cap, which as of Friday’s close stood at almost USD 22.9 mn.
This is the second delisting warning Swvl has received in recent months following a tough start to life as a public company. The company has traded below USD 1.00 a share since mid-September, triggering a warning from the Nasdaq in November that it would be delisted from the bourse if it failed to bring its shares above USD 1.00 for a 10-day stretch before 1 May.
Swvl’s share price has collapsed by more than 98% since its IPO last April when it was taken public via a SPAC merger that originally valued the company at USD 1.5 bn. The company debuted on the tech-heavy exchange at USD 10.00 a share and is currently trading at just USD 0.17.
It’s not just market volatility: Despite solid revenue growth, Swvl’s losses doubled during the first six months of 2022 due to rising expenses and costs relating to its Nasdaq listing, and in July the company was forecasting losses to double to USD 90 mn for the year. The company is yet to publish its 3Q financials.
Swvl is considering all of its options: Swvl said last month that it had formed a strategic committee “to explore and evaluate potential strategic alternatives.” The company said it was considering “corporate sale, merger or other business combination, a sale of all or a portion of the company’s assets, strategic investment, new debt or equity financings or other significant transactions.”
Cut costs wherever possible: Swvl was forced into making large-scale layoffs last year in a bid to steady the ship. It has reduced headcount by more than 50%, cut back on executive pay and closed some of its less profitable routes. It has also recently shuttered its operations in Pakistan, Pakistani media reported late last year.
Volte face: Swvl will unwind its acquisition of Turkish mobility business Volt Lines, which it completed last year, it said in last week’s filing. The former Volt Lines shareholders who traded their shares for Swvl shares “are not obligated to retransfer or cancel the tranche of their Swvl shares already received,” the disclosure said. Representatives from Swvl and Volt Lines didn’t respond to requests for comment when we reached out yesterday.
This is the second acquisition to fall through in recent months: Swvl and UK startup Zeelo called off a planned merger in July, citing turmoil in the financial markets.
Swvl went on an acquisition spree last year: The company acquired mobility platform Shotl, a Spanish firm that operates in 10 countries including Brazil and Japan. In November 2021 it took a controlling stake in South American transit company Viapool and last year entered Central Europe with its acquisition of German company Door2Door.