According to news reports, yes.
In "ordinary" times, perhaps. These aren't ordinary times for Wirecard.
It is why the lowest hanging fruit will be to trim headcount.
Wirecard has allegedly been very aggressive in acquiring merchants, so it's likely their per transaction cut is lower than what their competitors are getting. There are also some fixed operating costs, i.e. scale economies matter.
That's been a problem for other players, yes.
This could happen. It happened to CardSystems several years ago, and it was basically a death sentence, requiring CardSystems to sell itself to the highest bidder, a bidder who didn't have to bid very much. Interestingly, one of Wirecard's regional operating brands in the Middle East is "CardSystems."
This course of action is definitely in the cards but it will not happen so soon. There has to be concrete investigation by regulators involved before further actions to withdraw the license from Wirecard. So it will take sometime as long as bank creditors to Wirecard agree not to withdraw their credit lines and Wirecard is able to function on their working capital.
If they are the briefings don't have much shelf life. Their CEO resigned only this past Friday (June 19, 2020) and was arrested soon after. Their COO is gone, too. It's a very fast moving story.
Indeed, everyone is covering their asses right now just so in case the unthinkable happens to Wirecard.
Yes, major merchants and partners must be scrambling right now. "Mom and pop" merchants could be disrupted.
The Financial Times has been opening this can of worms for nearly 5 years. It seems to be a very big, very wormy can.
We do not know what other worms are unopened yet. So far allegations of round-tripping transactions are not yet proven.
It's probably worth something, but it's also difficult to value amidst this turmoil. Accounting problems can be really deadly.
Indeed, the alleged round tripping of transactions does add haziness to valuing this merchant acquiring business.
Even if Wirecard has such assets (not a given), they're not worth what they used to be. These days data centers tend to be "co-location facilities," meaning they're like Regus or WeWork facilities for computers. You don't own the building. Moreover, the now used equipment in those data centers isn't usually worth very much, even if it's premium gear (and it probably isn't). And if they're principally running in public clouds, they don't even have this much.
Right, but these could turn into e-waste. And who's going to pay to retrieve them, even if Wirecard owns them? (Wirecard might not.)
There is actually an interesting branch of investing involving distressed assets. The great Warren Buffett famously loaned billions to Goldman Sachs in the depths of the Global Financial Crisis. He demanded preferred shares yielding 10% dividends plus a stock purchase option. He got it, and he did quite well. Goldman Sachs did, too: they survived and prospered.
I find it hard to invest in Wirecard right now, except that I think technically it's drop too far for its real value. Well, Wirecard could be fundamentally bankrupt but that is for the future to decide. I am only trading this for now and not for long term holding. Adyen is likely to be 1 of those companies who will stand to benefit from this lost of trust in Wirecard and German Fintech as a whole, hence I bought it for medium term.
Some consumers could face difficulties, notably the consumers with Wirecard-managed prepaid cards that have balances held by Wirecard.
