German fintech group Wirecard became one of the hottest European stocks while battling endless allegations of fraud.
The former-CEO Markus Braun claimed a clean sheet for the company until as recently as May 17 when he tweeted: “When all the noise and dust settles, Wirecard will still be a company that generates a billion Euro of EBITDA this year and is one of the fastest growing in its industry.”
The allegations intensified when the company claimed €1.9 billion from its balance sheet probably never existed, and Braun was arrested. Wirecard filed for insolvency on Thursday, ending a dizzying few days for the scandal-hit company.
But how did things go so wrong for Wirecard? No one can know for sure right now, but questions are now being asked about whether the company’s rivals will be able to benefit from its spectacular fall from grace.
Rivals can expect only a “very small opportunity” for some incremental business since most of Wirecard’s transactions were fictitious, according to Neil Campling, Head of TMT Research at Mirabaud Securities.
Wirecard’s peers do not stand to gain from its insolvency, he said.
“Yes there could be scraps for Adyen, Square and PayPal to pick up but do you really think Wirecard has 300,000 paying customers as they claimed? There never was €1.9 billion.”
Its insolvency is “not a boon,” he continued.
Side note: Boon was the name of Wirecard’s app at the centre of their “ecosystem”.