Wirecard AG, one of the world’s leading digital payment providers, was admitted to the German Stock Index (DAX) on 24 September 2018. The Wirecard share had an all-time high of € 199.30 at this time. But it should not go as well as planned and speculation: on 24.09.2018, the share closed at 182.50 euros (ie, below the all-time high), while the stock today is more than 40 percent below the all-time high. Current price: 117.30.
Serious allegations against Wirecard AG led to freefall on the stock exchange
And the company from Aschheim near Munich even displaced Commerzbank into the MDAX. Nevertheless, DAX entry should not be easy for the financial technology company. Wirecard has been subject to repeated allegations since February 2017. At the time, Manager Magazine reported on opaque accounting practices. The stock nevertheless managed to perform well. However, as the Financial Times published several articles in January and February this year, in which Wirecard et al. Unfair commercial practices and accounting fraud were accused of panic among investors.
The responsible journalist at the Financial Times, Dan McCrum, is being investigated by the public prosecutor’s office in Munich for price manipulation on the stock market. The Federal Financial Supervisory Authority (BaFin) also issued a two-month ban on so-called short sales of the Wirecard share on 18 February. The panicked investors sold their holdings on a massive scale, sending the price of the Wirecard share into free fall. BaFin’s short sale ban stopped this case and the stock has since had time to recover. Nevertheless, the damage is done: To date, the company has suffered a loss in the market capitalization of about 8 billion euros.
The Wirecard share: fundamentally impressive, technically positive
However, Wirecard is fundamentally considered and, despite adverse circumstances, anything but bad. It is quite surprising that the corporation continues to have a good forecast for the coming years, despite all allegations and “attacks”. For example, it is said that earnings per share (earnings per share, EPS) should increase to € 7.21 by 2021. Already for this year, EPS of 4.25 euros is expected, a whopping doubling compared to 2017. Wirecard can look back on an operating profit of at least 740 million euros in the 2019 financial year.
Of course, such forecasts are not passed on by any analyst. On average, many analysts see the price target of the Wirecard share around 66 percent higher than currently at 193 to 194 euros. The current technical analysis supports these forecasts, at least on a weekly basis. The RSI and MACD oscillate relatively neutral to slightly positive. Other technical indicators are also included here. The moving averages of the shorter periods (eg 20 days) also show positive signals. However, the 200-day line still wants to invite for sale. Not surprising after the free fall of late January and early February.
Buy signals today? Yes. After expiry of the short sale lock? Pure speculation
The ban on short selling by the BaFin is still valid for quite some time. However, there is also a lot of uncertainty associated with BaFin interventions. No one really knows exactly how the price will develop. It is clear that a clear price recovery – initially – is to be expected. However, it is unclear how investors will behave after the short selling period has elapsed, that is, where the Wirecard share goes. From a technical point of view, getting started today would certainly be justified. And also the fundamental analysis looks by far not bad.
Nevertheless, it should not be forgotten what the Wirecard AG is accused. Although the company immediately rejected the allegations, the alleged price manipulation could sometimes not be proven to the Financial Times journalist McCrum. In addition, it should also be considered that the short-selling will expire in mid-April and price developments are pure speculation from this point.