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    From Penny Stock to $15 Per Share, Egypt’s Transport Startup SWVL Finds its Bearings on Nasdaq

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    SWVL, the Egyptian-born transport startup once heralded as a unicorn, has found itself at the receiving end of warning notices from the American stock trading exchange Nasdaq. These notices delivered a stark message: SWVL had failed to uphold a minimum market value of publicly held shares amounting to $15,000,000 on Nasdaq Global Market, potentially facing delisting. The most recent warning, dated December 26, 2023, highlighted the company’s non-compliance with Nasdaq Rule 5450(a)(1), as its Class A ordinary shares’ closing bid price had fallen below $1.00 per share for 30 consecutive business days.

    SWVL’s trajectory on Nasdaq tells a tale of ups and downs. After migrating from Nasdaq Global Market to the lesser Nasdaq Capital Market in July 2023 in a bid to alleviate regulatory pressures, its share value plummeted from a pinnacle of US$9.95 per share on IPO day in April 2022 to a low of $0.84 by October of the following year. Despite concerted efforts by the company, including a share consolidation initiative merging every 25 shares into one, internal restructuring that involved divesting from Urbvan — a Mexico City-based transportation service acquired in July 2022 — and a board overhaul incorporating industry stalwart Ayman Ismail Mohamed Ahmed, formerly President of North Africa and Chairman & CEO at Pepsi, SWVL continued to grapple with its Nasdaq performance.

    However, the tide has turned once more for SWVL on Nasdaq, with its shares now trading at $15 per share following the company’s recent announcement of profitability. In late December of last year, SWVL disclosed a remarkable shift in operating profits from a loss of $56.0 million to a profit of $13.4 million, despite a decrease in revenue from $21,671,391 to $11,116,013, indicating underlying challenges in revenue growth.

    S/NNAME OF COMPANYINDUSTRYSPAC MERGER COMPLETION DATESTOCK MARKETPRICE PER SHARE AT FIRST DAY OF PUBLIC TRADING (IN USD )CURRENT PRICE PER SHARE AS AT APRIL 5, 2024  (IN USD)
    1Anghami, Inc.Music StreamingFebruary 4, 2022Nasdaq8.881.02
    2Swvl Holdings CorpDigital TransportMarch 31, 2022Nasdaq9.3315.32
    3Forge Global Holdings, IncSoftware ApplicationMarch 21, 2022NYSE10.111.99
    4Cepton, Inc.Software ApplicationFebruary 14, 2022Nasdaq9.23.25
    5GreenLight Biosciences Holdings, PBCBiotechnologyFebruary 2, 2022Nasdaq8.82Closed July 25, 2023 after merger with SW MergerCo, Inc.
    6Dave Inc.FintechJanuary 05, 2022Nasdaq8.0237.77
    7Cvent Holding CorpCloud-based enterpriseDecember 17, 2021Nasdaq8.19Closed on June 16, 2023 after merger with Blackstone Inc. 
    8Boxed, IncEcommerce RetailingAugust 12, 2021Nasdaq9.98Delisted on Sep 5, 2023 after share cancellation
    9Vacasa, Inc.Rental Management PlatformDecember 06, 2021Nasdaq9.976.20
    10BigBear.ai Holdings, Inc.Artificial IntelligenceDecember 07, 2021Nasdaq10.031.93
    11BuzzFeed, Inc. Digital MediaDecember 3, 2021Nasdaq9.620.41
    12Lottery.comGamblingNovember 19, 2021Nasdaq8.232.14
    13DocGo Inc.Mobile Health PlatformNovember 17, 2021Nasdaq9.573.81
    14Embark Technology, Inc.Self-driving software solutionsNovember 10, 2021Nasdaq8.80Delisted on August 2, 2023 after acquisition by Applied Intuition
    15Nerdy Inc.Live online learning platformSeptember 20, 2021Nasdaq11.202.84
    16Offerpad Solutions Inc.Real Estate PlatformSeptember 01, 2021Nasdaq8.807.24
    17SmartRent, Inc.Enterprise software- Smart home operating system August 24, 2021Nasdaq122.56
    18Matterport, Inc.DataJuly 22, 2021Nasdaq15.002.06
    19Sunlight Financial Holdings, Inc.B2B2C POS FintechJuly 09, 2021Nasdaq7.97Filed for Chapter 11 Bankruptcy on November 1, 2023
    20Playstudios Inc.Gaming June 21, 2021Nasdaq5.82.91
    A cross-section of SPAC companies on Nasdaq and NYSE

    Analyzing SWVL’s Recent Resurgence

    While the sustainability of SWVL’s current share value remains uncertain, several factors may have contributed to its Nasdaq revival:

    A. Enhanced Regulatory Compliance

    SWVL’s leadership has evidently pivoted towards a more regulatory-conscious approach. While the company’s founders have been lauded for their swift execution, this agility had previously posed regulatory risks. It appears that the management has recognized this vulnerability, aligning its operations more closely with regulatory standards, including the decision to shift to the Nasdaq Capital Market for enhanced stability.

    B. Streamlined Business Model

    SWVL’s journey has been marked by significant fundraising, costly SPAC IPO fees, and substantial acquisitions, such as Volt Lines, Zeelo, and Urbvan Mobility Ltd in 2022. However, mounting compliance and operational expenses, coupled with underwhelming performance on Nasdaq, necessitated a strategic reassessment. The company’s recent divestments in Zeelo and Urbvan as well as layoffs have resulted in a leaner operational model, contributing to its valuation rebound.

    C. Strengthened Corporate Governance

    Acknowledging early challenges in adapting to public company status and heightened regulatory scrutiny, SWVL has proactively revamped its corporate governance practices. This includes recent board restructuring, with notable departures and appointments. Ayman Ismail Mohamed Ahmed’s induction, with his distinguished background encompassing leadership roles at Pepsi and Procter & Gamble, signifies a concerted effort towards bolstering governance and oversight. Ayman’s appointment came after W. Steve Albrecht and Gbenga Oyebode, resigned from the company’s board of directors and audit committee in May last year. 

    SWVL’s resurgence on Nasdaq underscores its resilience amidst adversity, yet the company remains in a precarious balancing act as it navigates the complexities of the public market landscape.

    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.

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