Swvl launches a new wave of layoffs after the write-off warning

Swvl launches a new wave of layoffs after the write-off warning
Swvl launches a new wave of layoffs after the write-off warning

According to some press reports, the Egyptian mass transit company, Swvl Holdings Corp (NASDAQ: SWVL), which is listed on the Nasdaq Stock Exchange, laid off a large number of its employees in the markets of Egypt, Dubai and Pakistan.

This comes in light of the company’s efforts to turn to profitability and reduce expenses, especially in light of the recent fall in the stock and the company’s market value, which made it subject to delisting from the Nasdaq Stock Exchange.

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One of the company’s employees spoke according to the “Al Sharq” website: “On Sunday, they told us that 90% of the Egypt team will be laid off, including me, in addition to laying off a large number of employees working in the offices of Dubai and Pakistan.”

However, another employee in the Cairo office said, “90% is an exaggerated rate… I do not know the exact number, but we were already informed that we would be laid off on Sunday, and I am among the laid-offs, but the exact numbers are with the (Swvl) company management only,” according to “Al Sharq.”

Earlier, Swvl reduced the number of employees by 32% as part of efforts to turn cash flow into positive by next year, and try to save expenses to save the company’s financial position, especially in light of the recent losses in the stock.

The company said those cuts will focus on jobs that have been automated through investments in engineering, product and support functions. It was not immediately clear how many jobs would be affected, but Swvl said it would help some employees move into new positions.

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transformation to profitability

The CEO of “SWVL”, which specializes in mass-sharing transportation services, said that he is confident that the company will achieve profitability in 2023, with the support of its activity in most of the countries in which the company operates, which will help remove the ambiguity surrounding the Egyptian company.

In a statement to Al-Sharq, on the sidelines of the “Future Investment Initiative” conference that was held in Riyadh a few weeks ago, Mustafa Kandil, CEO of the company, explained that “Swvl” is now achieving profitability in 70% of the countries in which it operates. As it focuses on expanding in the markets of Europe and Latin America; He revealed that the company is currently studying entering the US and UK markets, and is seeking to add financial services to enable it to support its own activities related to working with companies and governments, including, for example, providing the service of paying salaries in advance, he said.

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Share price

“Swvl” started trading its shares on the “Nasdaq” stock exchange in New York on March 31, after its merger with the American “Queens Gambit” last July, at a valuation of $ 1.5 billion, to result in a company called “Swvl Holdings Corp.”

The stock was listed on Nasdaq at a price of $10 per share, before the share price fell, since listing until now, by about 96% to approximately $0.393, bringing the company’s market value down to less than $53 million. The stock is now losing nearly 11.6% of its value over the course of two days.

The company said: “The decline in the stock does not cause concern to the management, but we have a responsibility towards every shareholder who suffers a loss, and we try to separate the action plan that we are following and the movement of the stock.” And she continued: “Last year, the investor was focusing on revenues, the plan for the coming years, and the markets in which we operate, but now the investor is looking more at the short term and profitability rates. The evaluation methods have completely changed in addition to the risk rate, so we now focus on the rapid transformation of profitability.”

Nasdaq warning

Swvl received its first share price drop warning from Nasdaq earlier this month, saying it had 180 days to raise its share price to avoid being delisted from the US stock exchange, the company said in a statement. Thus, Swvl has until May 1, 2023 to raise its share price above $1 per share for at least 10 consecutive days before it receives official notice of a possible write-off.

The company’s shares have been trading for less than $1 a share since Sept. 20. It is currently trading at about $0.39 per share – far from the $10 level at which the company’s shares began trading on the Nasdaq Stock Exchange last April. According to Nasdaq’s write-off rules, the index sends notice to any company whose share price remains below $1 for 30 consecutive business days. The listed company then has 180 calendar days to raise its share price above the threshold or be delisted.

Swvl is currently considering a reverse stock split – consolidating some of its shares to leave fewer higher-priced shares in the market and/or requesting an extension from Nasdaq giving it another 180 days to boost its share price.

Some sources confirmed, according to Maal newspaper, that the “Swvl” company has several options to avoid delisting from the Nasdaq stock exchange, most notably “sharing stocks” or “deleting them” with the aim of raising the market price of the share, after its value decreased by about 96% since the offering in March 2021.

She pointed out that the option of “accumulating shares” means converting a number of shares into one security, for example, if it is equal to 1 dollar, then the company collects all 10 securities into one share with a value of 10 dollars.

The article is in Arabic

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