Wirecard shares fall after reporting its results

  •   19/06/2020 - 10h50
  •   HARMANT Adeline

Yesterday and this morning we could see a real drop in Wirecard's share price on the stock market. The share price of this German company specialized in financial services has indeed fallen after the announcement by the group of a postponement of the publication of its annual results for the financial year 2019. We suggest that we go back together on this decision, which has made a great deal of noise on the market.

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Wirecard shares fall after reporting its results
Image copyright: Leo Molatore

Details of the Wirecard announcement:

It is thus within the framework of an official press release published this morning that the German Wirecard group declared to postpone to next Thursday the date of publication of its annual results for the year 2019. To justify this decision and this postponement, the group thus explained that the auditing firm EY for Ernst & Young, needed more time to remove the possible doubts which currently weigh on the accounts of the company.

Thus and following this announcement, Wirecard's share price plunged by almost 57.8% on the Frankfurt stock exchange with a quotation at 44€ on June 18th and after losing more than 66% following yesterday's publication.


What are the doubts about Wirecard's accounts?

The Wirecard group also explained itself with regard to the doubts put forward by Ernst & Young. Indeed and in its press release, the German company explains that it will not be able to present consolidated and certified annual accounts before Friday. The latter also explains that uncertainties remain regarding certain cash balances which represent an amount of 1.9 billion euros, i.e. almost a quarter of the consolidated balance sheet.

Also according to the data provided by this company, some of the elements suggest that these balances are false and that they were transmitted with the intention of misleading the audit firm.

And the German group insists by explaining that the management board is currently working in close collaboration with this audit firm, in order to make the situation clearer.

Regarding the most likely outcome of the events, it is clear that if the Wirecard Group fails to publish audited and consolidated accounts before Friday's deadline, it may be liable for nearly two billion euros in loans.

It remains to be seen whether the group will be able to reassure its investors before the end of the week. In the meantime, it is better to play prudent with this value and maintain a neutral positioning while waiting for new, more convincing and reliable signals. A failure of this publication would indeed send a strong selling signal and, a reassuring publication would undoubtedly allow the stock to start up again.