Wirecard Ex-CEO Arrested Over Missing Money

Wirecard Ex-CEO Arrested Over Missing Money

over 3 years ago2 mins

In a twist worthy of a certain Baltimore-based crime drama, the ex-CEO of fallen payments giant “The Wire” Wirecard was arrested late Monday, charged with fraud 🔒

What does this mean?

Last week investors who’d long bet against Wirecard’s shares, citing financial irregularities, were finally vindicated. The German firm revealed independent accountants had failed to find $2.1 billion the company claimed it had to hand – and its boss promptly bowed out.

On Monday, Wirecard admitted its missing money was probably as fictional as an HBO show 📺 On Tuesday, German authorities revealed they’d brought in the company’s recently departed head honcho. He stands accused of fraudulently inflating Wirecard’s revenue and cash balance in a bid to curry favor among investors. While time will tell whether he acted alone, the buck and the blame stops – for now – at the top.

Source: Markets Insider
Source: Markets Insider

Why should I care?

Wirecard’s stock has lost over 80% of its value since the scandal broke, yet its share price rose nearly 20% on Tuesday. Naysayers might call that a “dead cat bounce” and leave well enough alone 😾 But optimistic investors might wonder at Wirecard’s value falling from almost $12 billion to $2 billion in a matter of days – a much bigger drop than the value of the missing money – and see the former CEO’s arrest as a sign things are clearing up. Wirecard may still be a profitable business, and those investors might therefore think its shares should be worth more.

Besides payment processor Wirecard, the likes of PayPal and Square have also benefited from a major shift away from physical cash, particularly in developed markets 💵 That trend may well accelerate post-coronavirus, which could explain why the shares of non-scandal-struck PayPal and Square are both at record highs – and why British fintech Checkout.com was valued at $5.5 billion this week as it raised a fresh $150 million of funding.

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