Wirecard’s stock (ETR:WDI) price went up 15 percent on Monday morning in pre-trade but soon went down again. The reason: On Friday after the market closed, Wirewcard announced an extensive restructuring of the management board.
CEO Markus Braun has to give up at least part of his power after a highly anticipated special inspection of the Wirecard books by KPMG at the end of April had not been able to dispel all doubts about the business practices of the payment service provider. Braun apologized to all “shareholders, customers, partners and employees for the turbulence of the past weeks and months”, according to a message from Friday. On Saturday, he followed up on Twitter: “The right decisions about the future of the organization have been made,” he said. But soon after his tweet people reacted with questions, wondering what good can he and Wirecard company in general offer in the future.
Which innovations exaclty? What did wirecard started firstly on global comparison?— Anna (@anniLain91) May 9, 2020
As previously announced, Wirecard is creating a compliance department to monitor compliance with laws and regulations. As the company announced on Friday in Aschheim near Munich, the area will be hung on the board level and is to be managed by the 49-year-old American James Freis. The manager will be appointed to the board accordingly on July 1. The Chairman of the Supervisory Board, Thomas Eichelmann, was pleased that he was able to win “an internationally recognized compliance expert” with him.
Analysts were pleased but small investors are not. Analysts welcome the measures announced by the payment processor to restructure the management board and improve the organizational processes, wrote analyst Knut Woller from Baader Bank. The expert hopes that the capital market will now focus on the fundamental value of Wirecard’s business model.
But what is Wirecard business model?
Wirecard had booked half of its worldwide revenues from three obscure third-party acquiring partners and KPMG said it had not been able to conclude whether these revenues did or did not exist for the period 2016-18.
Wirecard bull Knut Woller from Baader Bank welcomes the announced measures and has confirmed his buy recommendation for the share with a target price of EUR 240. He expressed the hope that the capital market would now focus on the fundamental value of Wirecard’s business model.
Commerzbank analyst Heike Pauls describes the news as “groundbreaking” and spoke of a “game changer” for Wirecard.
But changing CEO will probably not push Wirecard stock price above EUR 200. This is just a dream in my eyes, even though dreams do come true sometimes.