Swvl Holdings Corp (Nasdaq: SWVL), a leading provider of technology-driven mobility solutions, has announced $4.2 million in new contracts in Egypt across various industries. The deals, spanning sectors like FMCG, telecom, e-commerce, and banking, come as the Cairo-founded company continues to emphasize its customized Software-as-a-Service (SaaS) and fully managed transportation offerings.
However, the upbeat announcement is juxtaposed against a backdrop of lingering uncertainty. Swvl’s financial health and operational trajectory remain under scrutiny, with key financial reports pending and the company battling claims of bankruptcy.
The newly announced contracts, secured over the past three months, underscore Swvl ’s potential to cater to diverse client needs. By offering shift-based transport solutions for employees, efficient commute systems for students, and tailored workforce mobility services, Swvl seeks to address complex transportation challenges in Egypt.
Mostafa Kandil, CEO of Swvl, expressed optimism about the new partnerships, emphasizing the company’s commitment to innovation in mobility solutions. “These contracts are a testament to Swvl’s ability to deliver transformative solutions,” Kandil stated. The contracts come on the heels of Swvl’s strategic five-year deal with e& Egypt, a telecommunications leader, valued at up to $6.3 million.
Despite these developments, questions loom over the sustainability of Swvl’s model. While the company’s 2023 financial performance marked a sharp turnaround — with a net profit of $3.1 million, up from a $123.6 million net loss in 2022 — analysts remain cautious. Swvl’s $8.2 million losses from subsidiary sales and a reliance on one-off debt settlements for profitability have raised concerns about the resilience of its revenue streams.
Swvl’s expansion into Saudi Arabia also signals growth ambitions. In Q3 2024, the company reported a sixfold increase in gross profits in the region, supported by $2.6 million in new annual contract value. The Saudi contracts highlight Swvl’s push into education, food and beverage, healthcare, and other industries. Its platform leverages AI-powered routing and real-time monitoring, particularly benefiting student commutes.
However, the Saudi expansion — while promising — has yet to offset the challenges Swvl faces in its home market of Egypt. Persistent macroeconomic headwinds, including a 40% devaluation of the Egyptian pound and surging inflation, continue to impact the company’s cash flows.
Swvl’s most recent financial disclosures have done little to quell skepticism. The company has not issued a detailed earnings report since its 2023 filing, leaving investors in the dark about its 2024 performance. This delay has intensified scrutiny, especially as Swvl faces legal challenges. U.S. law firm Pomerantz LLP is investigating potential securities fraud following a damning report by Wolfpack Research, which alleged that Swvl is nearing bankruptcy.
Wolfpack’s report highlighted operational disruptions in Swvl’s Cairo services, citing widespread route cancellations and customer dissatisfaction. The firm also flagged Swvl’s dwindling cash reserves — down to $2.9 million at the start of 2024 — as a red flag for its long-term viability.
Swvl’s stock has faced significant volatility. Following Wolfpack’s allegations, shares dropped 43.62%, closing at $3.05 — a stark decline from its $10 IPO price in 2022. Investors are now cautiously monitoring Swvl’s attempts to attract strategic capital, particularly for its planned U.S. expansion in 2025.
Analysts note that Swvl’s reliance on contract wins to bolster investor confidence might not be enough to offset structural challenges. The company’s efforts to streamline operations, including the divestment of its European and Latin American businesses in 2023, have provided short-term relief but failed to establish a sustainable growth model.
As Swvl navigates its most challenging phase yet, its future hinges on a delicate balancing act: securing capital, delivering consistent revenue growth, and regaining investor trust. The broader implications of Swvl’s struggles are also noteworthy, casting a shadow over investor sentiment in African tech startups.
While the new contracts in Egypt reflect a glimmer of hope, Swvl ’s ability to sustain this momentum and address mounting legal and financial hurdles remains to be seen. The next few months will be crucial, not just for Swvl but for the broader perception of the transportation-as-a-service sector in emerging markets.