Wirecard's Fair Value Must Be Reduced After It Lost The Trust Of Its Investors

May 04, 2020 6:25 PM ETWirecard AG (WCAGY), WRCDF68 Comments
The European View profile picture
The European View


  • After a long waiting period, KPMG published the final report on the review of Wirecard's balance sheets.
  • The company and the market have reacted differently to the report.
  • After a long period of waiting, Wirecard published KPMG's final report on the review of Wirecard's balance sheets.
  • Wirecard has at least not acted transparently. Wirecard's statement that KPMG has refuted all accusations is also highly euphemistic.
  • It will be a long time before Wirecard regains credibility here.


After a long period of waiting, Wirecard published KPMG's final report on the review of Wirecard's (OTC:WRCDF; OTCPK:WCAGY) balance sheets. Wirecard commissioned the investigation after the allegations of the Financial Times ("FT"). After the publication, something interesting happened. Wirecard has published on its webpage the report with the following words:

No incriminating evidence was found for the publicly raised accusations of balance sheet manipulation.

So, this is one perspective. Let's take a look at how the market perceived the KPMG report:

Wirecard has lost almost a third of its market value within a short time. This is a clear sign that the market takes a substantially different view of the report than of the company. And this is precisely where the company's major problem lies. So, it is time for an analysis of the different points of view.

The findings on the individual allegations

So, let us first look at the results of the specific allegations. As a reminder, the FT's allegations concerned three areas. Firstly, the handling of the Third-Party Acquiring Partner ("TPA") businesses had been criticized. At the same time, more and more inconsistencies have come to light in the India and Singapore business.

Third-Party Acquiring Partner ("TPA")

In particular, the FT raised the allegation that Wirecard had increased its sales revenues through fictitious customer relations with TPAs. Thus, Wirecard is said to have reported higher consolidated sales revenues and hence an increased consolidated net income due to false customer sales. To proof these allegations, FT contacted 34 customers and found implausibilities indeed. This mainly related to TPAs operating in Ireland and Dubai.

And what did KPMG find out? KPMG was simply unable to make any statement on the amount and existence of revenues from the criticized third-party business in the years 2016 to 2018. KPGM could neither find

This article was written by

The European View profile picture
Runner of the TEV Blog | Private InvestorI am a long-term oriented investor and in my early thirties. I hold a law degree and a doctorate in law and love investing and talking about my and others' investments. I regularly write about my research and investments on various investor platforms and the TEV Blog. **My articles represent my opinion only and in no way constitute professional investment advice. It is the responsibility of the reader to conduct their due diligence and seek investment advice from a licensed professional before making any investment decisions.**

Disclosure: I am/we are long WRCDF, WCAGY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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