After the bankruptcy filing of the payment processor Wirecard (ETGR:WDI), which share price plummeted after a balance sheet scandal, we woke up to another day of disaster for WDI investors. The stock price fell by a further 80 percent to EUR 3.25 on Thursday. Since the shift in the balance sheet for 2019 in the previous week and the admission of alleged air bookings worth billions, the stock have now lost almost 98 percent of its value.
The Management Board justified the opening of insolvency proceedings with the Munich District Court with the threat of insolvency and over-indebtedness.
The accounting firm EY had refused to testify for the 2019 financial statements because it could not find sufficient evidence to support the existence of alleged trust account balances of EUR 1.9 billion in the Philippines. Wirecard has since admitted that the money “with a predominant probability” does not exist at all.
The foreseeable insolvency of the payment service provider could be expensive for a number of banks that have provided the company with up to EUR 1.75 billion via a credit line according to a bond prospectus. According to the prospectus, these include Commerzbank as the leading instituteand the Landesbank Baden-Württemberg (LBBW). The banks had just granted Wirecard a few days’ delay to check the company’s long-term viability before claiming back the outstanding amount.
With the recent price crash, the Wirecard share could top the list of the ten highest daily losses of a Dax value. If it shows a minus in the amount similar to the current one by the end of trading, this would be the highest loss of a Dax title in the almost 32-year history of the leading German index. The crash of around 98 percent since last Wednesday is already unique in the Dax.
Wirecard is also threatened with ejection from the Dax in autumn, in which shares were only included in September 2018. At that time, Wirecard, with a market capitalization of almost 25 billion euros, was more valuable than Deutsche Bank.
The company’s bankruptcy filing is the tentative high point of the past few days that have been bristling with scandalous events, noted Nord LB analyst Wolfgang Donie. The expert strongly advises against speculative investments at Wirecard. He cut his target price from 20 to 1 euro and joined the Bank of America expert Adithya Metuku, who had already attracted attention with this target the previous day.