Digital Payments Company Wirecard and Financial Problems

German digital payments company Wirecard made an interesting announcement on Monday. The tech firm said that missing $2.1 billion its auditors were unable to locate probably never existed. This announcement highlighted the severity of the problem.

Interestingly, shares in Wirecard dropped in early trading on Monday. Moreover, the stock lost more than 85% over three trading sessions. The firm’s market value fell by $12.5 billion since its auditor decided not to sign off the company’s accounts.

Moreover, the digital payments company withdrew its preliminary results for 2019. Furthermore, Wirecard also withdrew its profit forecast for 2020. It is worth mentioning that, Wirecard warned that financial results from previous years may also be affected.

Last week, Ernst&Young said that it was impossible to locate the cash, which makes up roughly a quarter of the company’s assets. The search for the funds had focused on the Philippines. However, the missing funds did not enter the country’s financial system.

The history of Wirecard

Interestingly, there was a time when Wirecard was one of the most promising tech firms in Europe. As a reminder, it processes payments for consumers and businesses as well as it sells data analytics services.

Currently, it has nearly 6,000 employees in 26 countries around the world. In 2018, the firm reported revenues of over $2.2 billion. As a result, compared to 2013 revenues increased by more than four times.

The same year, shares reached an all-time high above $213 in September. Moreover, the same month Wirecard replaced Commerzbank in Germany’s list of top 30 companies. At that time, the firm was worth more than $26.9 billion. However, at the beginning of this week, the stock was trading as low as $14.56. As a result, the company’s value fell to less than $2.2 billion. The company was struggling to cope with problems even before the latest announcement.