Swvl Holdings Corp (SWVL) research, news, and more from GeoInvesting

Company description

Fri, 19 Jan 2024 14:21:05 GMT

Swvl Holdings Corp. provides mass transit ridesharing services. It offers B2C Swvl Retail, which provides riders with a network of minibuses and other vehicles running on fixed or semi-fixed routes within cities; Swvl Travel that allows riders to book rides on long-distance intercity routes on vehicle available through the Swvl platform or through third-party services; and Swvl Business, a transport as a service enterprise product for businesses, schools, municipal transit agencies, and other customers. Swvl Holdings Corp. was founded in 2017 and is headquartered in Dubai, the United Arab Emirates.

Research

Mon, 22 Jan 2024 15:16:24 GMT

Portfolio Protection Research (Full article at Pro Portal)

As part of our portfolio protection series we occasionally do, we are offering this research on Swvl Holdings Corp (NASDAQ:SWVL). We have NO POSITION in the stock.

On January 11, we noted the Swvl Holdings Corp (NASDAQ:SWVL) 405% rise in shares to $4.90 on the heels of its December 27 earnings release reporting profitable first half 2023 financial results under Generally Accepted Accounting Principles (GAAP).

Per the company’s Wikipedia page:

“Swvl provides ridepooling services with a focus on mass transit. Using the app, customers can reserve and pay for rides on private buses operating on fixed routes. The company's proprietary algorithm uses the passenger's location and destination to calculate the quickest trip time.”

The core of our research note was that after adjusting for certain non-recurring line items in the company’s financial statements, the company would have lost money.

If you are new to the concept of GAAP reporting standards, it is the standard that publicly traded companies domiciled in the U.S. have to comply with when reporting their financials. (Foreign companies may also be permitted to use International Financial Reporting Standards, IFRS, accounting standard). We stated that:

“The introductory bullets and main comment area of the earnings press release omitted a discussion on certain line items (income, expenses and non-cash items) that were present in the company’s financial tables that we consider non-recurring.”

The stock continued its post-earnings runup to as much as 569% intraday and have since settled in the mid $3.00 area.

Now, as we will show with screen shots and recorded videos, our frustrating navigation experience with the company’s website ( laptop/mobile) and APP have us scratching our heads.

More specifically, are the issues we encountered impacting the ability for the company to acquire and retain new customers?

Although our experience alone is not a conclusive indication that the company is not making progress in its turnaround plan, and could very well be on their list of things to address, we still believe it’s something that might be important to investors.

Our experience has us pondering whether or not this technology company may be deficient in the resources it needs to upgrade technology and maintain its software development support staff needed to grow.

Before we briefly illustrate our experience with the app, we once again want to be crystal clear that we do not have a position, long or short, in SWVL stock.

See our experience here.

Research

Thu, 11 Jan 2024 05:00:00 GMT

On December 27, 2023 Swvl Holdings Corp (NASDAQ:SWVL) issued a press release, reporting first half 2023 financial results and GAAP net income of $2.1 million. We believe the company should have also presented non-GAAP net income, adjusting for certain financial statement items that would have resulted in the company reporting an adjusted loss of $2.6 million. The adjustments we made would also translate into an operating loss. Retail investors may just be referencing the GAAP numbers, resulting in the stock’s 405% post-earnings price increase.

We currently have no position in SWVL, nor are we suggesting that this research be used as grounds to initiate any sort of position in the stock. Furthermore, the stock has only 7 million shares outstanding and appears to be in pump mode.

SWVL’s price soared as much as 405% higher to a peak price of $4.90 in the days following its December 27 earnings release, when it reported 2023 first half results showing a $2.1 million GAAP profit, translating to EPS of 25 cents. This reversed a large loss versus the prior year’s comparable period. Sales fell 48% to $11.1 million. Shares closed at $4.54 yesterday, still up 368% since its earnings release. Today, they are up again.

The company had been losing a sizable amount of money prior to going public via a SPAC transaction with Queen’s Gambit Growth Capital on April 1, 2022. And they continued to do so after the listing.

The introductory bullets and main comment area of the earnings press release omitted a discussion on certain line items (income, expenses and non-cash items) that were present in the company’s financial tables that we consider non-recurring.

We believe investors would find the line items we used to adjust GAAP net income as important factors to diagnose the health of the company and conclude that the reported GAAP net income may not be an accurate representation of the company’s future earnings power.

PR Comments:

“The Company has achieved positive operating cash flow and net profits, which it believes demonstrates the successful completion of the portfolio optimization program initiated last year, off the back of the global economic and capital markets environment at the time. Swvl aims to maintain and further boost profitability while resuming its enhanced strategic expansions to high revenue markets.”

Key highlights from Swvl’s H1 2023 financial report include:

Operating Cash Flow: Operating cash inflows of $2.2 million in H1 2023, compared to operating outflows of $76.8 million in H1 2022.
Gross Profit: Gross profit of $1.8 million in H1 2023, compared to gross loss of $2.7 million in H1 2022.
Operating Profit: Operating profit of $13.4 million in H1 2023, compared to operating loss of $56.0 million in H1 2022.
Net Profit: Net profit of $2.1 million in 2023, compared to net loss of $161.6 million in H1 2022.
Total Equity: Total equity book value of $5.0 million as of 30 June 2023, compared to total equity of $2.6 million as of 31 December 2022 (total deficit of $24.5 million as of 30 June 2022).

“This achievement underscores the Company’s commitment to financial stability, operational efficiency, and profitable growth initiatives implemented throughout the fiscal year. The successful transformation to positive cash flow and profitability is pivotal for Swvl’s enhanced strategic expansions to high revenue markets.”

Adjusting GAAP net income for these line items in the actual financial tables would translate into an adjusted or non-GAAP loss of $2.6 million.

*Red: Subtract from GAAP net income
*Green: Add to GAAP net income

Although SWVL’s balance sheet has improved due to a $12 million asset sale ($9.5M up front, $2.5M over one year) announced on September 12, 2023, the stock did not move on that news.

Thus, we believe the sharp rise in shares could be due to investors taking the company’s reported profitable first half 2023 GAAP net income at face value, while at the same time being unaware of some non-recurring financial line items that helped the company show a GAAP profit.

While management did not violate reporting standards, we believe they should have been more transparent by including adjusted net income and operating income figures in the press release bullets, press release verbiage and in a reconciled table.