Wirecard share price: History suggests the online way is up

Can Wirecard shares recover from what’s becoming a much more complex scandal than onlookers first suspected? When the once darling of European fintech revealed that €1.9 billion missing from its accounts didn’t exist, it looked like the end.

The German payment provider had long been a staple investment for major hedge funds in the region. However, after the news went public and former CEO Markus Braun turned himself in to the police, investors quickly began pulling out. Naturally, the Wirecard share price crashed.

From a high of €104.50 in mid-June, its shares have tumbled to €2.43 at the time of publication. One thing we know for certain amid the current uncertainty is that Wirecard is still operational. The management has applied for insolvency but stressed that a ‘continuation’ is in the ‘best interests’ of the company’s creditors. For those looking to speculate on Wirecard shares, this raises an obvious question: is now the time to buy?

Fund managers move away from Wirecard shares

Anyone tracking the story could easily be swayed to follow European Opportunities’ fund manager Alexander Darwall and look elsewhere. Wirecard was previously Darwell’s largest shareholder, but recent events have forced him to jettison his shares in the company. He’s since apologised for trusting Wirecard’s management despite repeated reports of financial mismanagement.

To compound matters, Wirecard’s former chief operating officer Jan Marsalek is now on the run amid rumours he had links to the secret service. Throw into the mix pressure for Germany’s deputy finance minister Jörg Kukies to disclose details of conversations with Wirecard’s Braun, and it seems the scandal is far from over. As such, the recent 97% Wirecard share price slide may not have bottomed out just yet.

However, signs of a slight recovery could make it an asset to watch. As trading opened on July 13, Wirecard shares crept up to €2.51 before dropping back slightly. Although minor at this stage, a resurgence isn’t out of the question. Prior to the scandal, Wirecard was among Europe’s largest fintech companies. As of 2018, its digital payment solutions were being used by Air France-KLM, Qatar Airways, Transport for London and Allianz, to name but a few. Net revenue was a reported at €2.1 billion, the company achieved a listing on DAX and it had a market capitalization of €22.5 billion.

Does history suggest Wirecard shares are set to recover?

By all markers, Wirecard was a solid investment. Of course, recent revelations will call into question the legitimacy of its financials. However, even if past reports were overinflated, Wirecard was still providing services to some of the biggest companies in the world. In other words, its technology was proven and popular. By removing any trace of the old management and sticking to its fundamentals, it could recover. Therefore, the Wirecard share price could rally towards the end of 2020, or at some point next year.

Investors only have to look at Facebook for reassurance that scandals can be forgotten if a service is deemed popular enough. When the Facebook/Cambridge Analytica scandal broke in March 2018, Facebook shares fell by more than 24%. With 87 million 'psychographic profiles' harvested and the issue of user privacy coming to the fore, Facebook was under fire from all angles.

CEO Mark Zuckerberg was put before Congress in the US and talk of breaking up the company was rife. However, by May, Facebook shares had recovered as if nothing ever happened. Wirecard may not be as significant a player in the tech world as Facebook. However, things that happen at the top often set a precedent.

This could be the saving grace for Wirecard shares. New management and a glimmer of hope that revenue will return to normal could be enough for investors. Indeed, with the Wirecard share price plunging to new lows, the only way is up. If it can survive the current scandal and find a way out of insolvency, the outlook is positive. Based on all the factors, Wirecard shares may be worth watching, with the understanding that any investments will go down to the wire.

How to trade stocks with IG

Looking to trade Wirecard and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs and spread bets in a few easy steps:

1. Create an IG trading account or log in to your existing account
2. Enter ‘Wirecard’ in the search bar and select it
3. Choose your position size
4. Click on ‘buy’ or ‘sell’ in the deal ticket
5. Confirm the trade