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Wirecard shares plunge almost 70% after auditor finds €1.9bn black hole

Markus Braun wirecard ceo

Wirecard shares plummeted more than 66% on Thursday morning after the German payments group said its auditor had found a €1.9bn (£1.71bn) black hole in its accounts.

The fintech firm said there were indications a Wirecard a trustee had tried to “deceive the auditor and create a wrong perception of the existence of cash balances” through various bank accounts.

The group said in a realease: “There are indications that spurious balance confirmations had been provided from the side of the trustee respectively of the trustee’s account holding banks to the auditor in order to deceive the auditor and create a wrong perception of the existence of such cash balances or the holding of the accounts for to the benefit of Wirecard group companies”.

Wirecard (WDI) shares made some gains and were 45% down later on Thursday afternoon, with the stock trading at around €53.9, down from yesterday’s closing price of €103.30 per share.

wirecard WDI 1 day stock chart

Wirecard’s chief executive Markus Braun (pictured) added: “It is currently unclear whether fraudulent transactions to the detriment of Wirecard AG have occurred. Wirecard AG will file a complaint against unknown persons”.

If the company fails to provide audited financial reports, conducted by Ernst & Young, by Friday it could face the termination of around €2bn in corporate bank loans, a move that could lead to an immediate default or even bankruptcy.

Investors are already calling for an in-depth revision of the company’s leadership amid the scandal, especially since Wirecard had already been under suspicion of potential fraud and false accounting after a report from KPMG was released last month saying that the firm was unable to verify roughly €1bn in revenues recorded on its books.

The Aschheim-based digital payments processor is also the subject of a long-running investigation into potential market manipulation from German’s financial watchdog, Bafin, based on allegations of collusion with short sellers to manipulate the price of the company’s shares.

Here is a link to the company’s full press release on the matter: Wirecard’s press release.

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Alejandro Arrieche

Alejandro is a financial writer with 7 years of experience in financial management and financial analysis. He writes technical content about economics, finance, investments, and real estate and have also assisted financial businesses in building their digital marketing strategy. His favorite topics are value investing and financial analysis.