Mirroring its global peers, Egypt-born and UAE-based mass mobility startup SWVL is bracing itself for drastic monetary belt-tightening policies and restructuring operations, pulling the trigger on large layoffs across some of its markets over the past couple of weeks, with further employees expected to leave the company in the coming period.
SWVL’s team in its founding country is bearing the brunt of these redundancies. Former employees are taking to social media asking for job opportunities, CVs are being forwarded through Whatsapp groups and virtual events have been organised to help connect affected employees with potential employers.
Besides Egypt, the recent round of layoffs has reportedly impacted the company’s teams in Dubai and Pakistan as well. The cuts include staffers from multiple departments, including tech and HR teams, according to a former employee at SWVL, who asked not to be named.
"Up until a few days ago and before we were notified about the cuts, all departments were functioning normally. So far, no one knows what will happen next," they said.
The exact number of employees affected has not yet been announced by the NASDAQ-listed company.
This is the second round of layoffs for SWVL, which unveiled plans back in May to slash jobs by 32 per cent, in order to “accelerate its path to profitability to turn cash flow positive in 2023".
The IPO debacle
In March this year, SWVL, then valued at $1.5 billion, went public on the US NASDAQ through a SPAC merger with Queen's Gambit Growth Capital with an initial offer price of $9.95 per share. But the company struggled to maintain its opening share price after failing to turn a profit across its markets. It has seen its share price plunge nearly 95 per cent over the span of six months, with its valuation nosediving from $1.5 billion to $53 million as of November.
“There have been deliberations between the top management, investors as well as the board of directors going on for some time. There has been increasing pressure on the top brass to focus on profitability in order to be able to regain the minimum bid stock price to $1 per share," added the source.
On 4 November 2022, SWVL received a letter from NASDAQ citing compliance issues as the company's shares have been trading below $1 for over 30 consecutive days. It is now at risk of being delisted as a result. As of writing, SWVL's stock is trading at $0.44, up 14 per year from its previous close.
In October, however, SWVL also announced that operations in half of the markets it turned EBITDA positive or broke even in August 2022.
"The drop in the company’s valuation is no flash in the pan, considering that revenues are not going up," said Ayamn Khalaf, a financial markers technical analyst.
“Similar to other tech companies, a state of lingering high inflation coupled with a slowdown in venture capital has complicated the situation for SWVL. But, I think the model itself is not working well for the startup. To cope with losses, they had to raise their prices. So for users in Egypt for example, the model is poorly suited for their needs and no longer a viable alternative for public transport. This has resulted in a fall in its customer base and thereby revenues. Besides, It has not been strongly validated in some of the markers they expanded to," he added.
Last October, SWVL announced the launch of clean mobility solutions in an expansion to Switzerland, bringing the number of total markets it operates in to more than 18 across Latin America, Europe, Africa and Asia.
On the acquisition front, SWVL's acquisition spate includes Mexico-based mass mobility startup Urbvan, Turkey-based B2B mobility startup Voltlines, German mobility software startup door2door, Argentina's Viapool and Spain's shuttle-booking Shotl.
These layoffs could also come as a direct result of the company's consolidation and expansion spree, for which it has had intensive hiring drives in place over the past few years. SWVL's relentless desire for growth and expansion has prompted many to question the massive investments related to these expansion plans and causes the company to repeatedly fall in a ditch of overhiring and high burn rate.
SWVL did not respond to Wamda’s request for comment.