Where Are Wirecard’s Missing Billions?
Wirecard was a high-flying payment processor, listed on the Frankfurt stock exchange as Germany’s symbol of innovation. But it fessed up to something massive last week; $2.1 billion in “missing” cash. The Invstr community went from 91% bullish on the name to almost a quarter-short in a matter of hours. The stock dropped like a stone, over 70%!
If it made that $2.1 billion in profit, someone, potentially management, has run off with it. If it didn’t make that $2.1 billion in profit, this is the biggest fraud in German history, because everything that generated the fake cash must have been fake, too.
CEO Markus Braun led investors to believe the cash was with two Filipino banks, just before handing in his immediate resignation. However, it took a quick phone call overseas to ascertain that not a single euro was with those banks.
$2.1 billion would have made up five percent of foreign currency deposits in the Filipino banking system. In other words, someone would have noticed. This is not a good look for Wirecard, its auditors, or regulators.
The news could shake Europe’s markets and cause investors to re-audit their stock picks, just in case. The coming footage of handcuffed executives trudging out of their high-rises could inspire political action from Angela Merkel, and an overhaul of regulator, BaFin.
If nothing else, these revelations underscore again how important vigilante short-sellers can be in our markets. It’s been a period of years since eagle-eyed bears dug deep into Wirecard’s financial statements to figure things were off. Finally, they can stop banging the drum. This is an excellent reminder of what patience is worth to an investor!
