Are you following up on the latest tech stock resurrection on the block?


It’s been exactly 7 years since the company was established and 2 years since its debut on Nasdaq, which was followed by a valuation drop from the initial $1.5 billion to $16 million in December’22. Almost a year later we witnessed a long-awaited twist to the story.


The first $1.5 billion unicorn from the Middle East to list on Nasdaq seems to be standing again on its 4 legs. Healthier 4 legs.



The unfolding resurrection of Swvl


The first investment of our Fund II. The first $1.5 billion unicorn from the Middle East to list on Nasdaq stock exchange. I can still remember the excitement on March 31, 2022, ahead of Mostafa Kandil’s ringing of the opening bell. Red confetti flying all over, slowly descending towards the ground. Swvl’s stock price began mimicking the confetti, as if the gravitation force was also pulling it downwards…



Q2 2022, the first quarter since Nasdaq debut


Corp’s Class A ordinary shares and warrants commenced trading on Nasdaq on April 1, 2022 (ticker: SWVL), which was followed by a drop in the stock price due to January anomaly and post-IPO trends. The stock price recovered at the end of April’22 only to be followed by another drop as a result of the global economic downturn.


Swvl announced a portfolio optimization program to turn cash-flow positive in 2023. At that time, the company was already operational in countries like Germany or Argentina. And Swvl’s acquisition spree was in full force: Volt Lines (Turkey), Zeelo (UK) and Urbvan (Mexico). (Note: Zeelo was called off.)


By June’22, Swvl paused daily intra-city rides in Pakistan and Kenya in light of the global economic downturn. The management signaled a possible headcount reduction affecting mainly engineering, product and support. A not so rosy outlook…


But they managed to raise. In August’22, Swvl announced a $20 million private placement, which was supposed to take them to their breakeven point.


Trading below the $1 mark


The optimization program seemed successful: the company turned contribution margin breakeven (after everything except fixed OPEX/R&D), and Egypt, Turkey, Germany, Kenya and Jordan turned Adjusted EBITDA positive or breakeven… But come September’22 and Swvl’s stock price was trading below the $1 mark. The founders explained this was due to short investors and temporary unwillingness of institutional investors to invest. One could also blame Swvl’s rapid expansion policy, which cost the company hundreds of millions of dollars.


Shutting down Pakistan, reducing total headcount by 50%


The company introduced another optimization program to reduce costs by (i) focusing on the largest markets which contribute the majority of Swvl’s revenues (i.e. Egypt and Mexico), (ii) shutting down operations in Pakistan, (iii) reducing headcount by 50% and (iv) cutting operating expenses (incl. marketing).


Swvl’s market value continued to be below the required threshold ($50 million) throughout the last quarter of 2022 and a written notice of non-compliance from Nasdaq was on its way.


Reverse stock split, pending 2022 Annual report


In January’23, Swvl got an ultimatum from Nasdaq to ensure that its minimum market cap is worth $50 million for 10 consecutive days ahead of July 10, 2023.


To regain compliance with the Nasdaq $1.00 minimum bid price requirement, the company proceeded with a reverse stock split of Class A ordinary shares, at the ratio of one-for-25 such that every 25 issued Ordinary Shares would be combined into one Ordinary Share, with a par value of $0.0025 each. Swvl began trading on Nasdaq on a split-adjusted basis at the start of trade on January 26, 2023.


In the middle of all that, Swvl cancelled its acquisition of Volt Lines (Turkey). Not a shocking move.


Another notice from Nasdaq was on its way in May’23, this time for Swvl not doing its homework. Its annual report (fiscal year ended December 31, 2022) was not submitted on time. Nasdaq’s new deadline was the end of October’23.


Licensed in Egypt, moving to Nasdaq Capital Market


In June’23, Swvl became the first company to acquire a license for transporting people in Egypt using an app. This five-year license was granted to them by Egypt’s Land Transport Regulatory Authority (LTRA). The company was also looking into operating smart transport lines to link Greater Cairo with the New Administrative Capital.


Given the persisting market cap issues, Nasdaq approved Swvl’s request to transfer its listing from the Nasdaq Global Market to the Nasdaq Capital Market, an equity market for companies with the smallest levels of market capitalization within the Nasdaq Composite Index. The trading commenced on July 19, 2023.


In line with Swvl’s strategy to focus on higher priority markets, the company sold Urbvan Mobility to Kolors, a leading transport provider in Latin America, for aggregate gross proceeds of $12 million (all cash). Urbvan represented approx. 7% of Swvl’s IFRS revenues as of December 31, 2022.


First group gross profit


The last day of October’23 couldn’t come faster enough. Turns out Swvl’s 2022 revenues grew 101% yoy and the company posted its first group gross profit ($2.75 million), largely because its revenue grew faster than its basic cost of operating its fleet of buses (55% yoy). Booked rides jumped to almost 46 million and Swvl buses were full 96% of the time.


The market was expecting a jump in stock price following the H1’23 results announcement that was due at the end of December’23.



Graph: Swvl 6m stock price chart as of April 3, 2024.


First-ever net profit


On December 27, 2023 we all learned of Swvl’s first-ever net profit of $2 million in H1’23 (vs. -$161.6 million in H1’22).


Turns out that most revenues (73.7%) come from selling technology that clients use to plan their routes, operate fleet services or even manage riders. The rest is from operating buses. Also, the company’s largest market (Egypt) brought in 93% of its revenues, while KSA brought in 7%. (Nada from the UAE though it’s also one of their focus markets.)


How did they achieve profitability? Swvl had cut about one third of its workforce in 2022, which allowed them to reach profitability in 2023 instead of 2024 as originally planned. They sold off their subsidiaries in over a dozen countries (Argentina, Chile, Mexico, Germany & Pakistan) and narrowed the focus to three markets: Egypt, KSA and the UAE. They also reduced the compensation paid to senior management and company directors from $13.4 million in H1’22 to $344k in H1’23. And they sold Urbvan earlier in 2023.


Swvl aims to proceed with careful expansions in 2024, with a focus on Saudi and rehiring some of its employees, which will again increase their compensation packages.


And the stock price? Resurrected. Awake. 1,420.18% growth over the past 6 months.


2023 annual report should be announced soon. We’re all ears.

TL;DR (too long; didn’t read)  
I map Swvl’s actions and decisions since its trading debut on Nasdaq 2 years ago until its stock price resurrection starting December 27, 2023, following the announcement of the company’s first ever net profit. Swvl’s stock price grew 1,420.18% over the past 6 months.


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