The slump in Wirecard share price continues unabated into its third day, as its accounting scandal deepens. News monitored from Reuters a few mins ago indicates that German prosecutors are mulling the arrest of executives Markus Braun and Jan Marsalek, who worked as Chief Executive Officer (CEO) and Chief Operations Officer (COO) respectively. Braun resigned on Friday while Marsalek was relieved of his position today.
Wirecard presently owes its banks 1.75 billion Euros, as the company now says it probably never had the 1.9 billion Euros it had stated in its books were lodged in overseas banks. A German economist and accountancy fraud expert Carola Rinker says that Wirecard has damaged the credibility of the DAX with international investors. The DAX was, however, able to stabilize today with only a marginal loss as investors try to shake off the impact of this scandal.
Wirecard share price activity in the last three days has struck off a full decade of gains, and the worst does not seem to over yet. The stock has lost 85% of its value this month, and could add to those d add to those losses if the scope of the scandal expands. There is also the overhanging threat of liquidation or takeover of the company’s assets if its creditor banks decide to recall its loans.
The next support target if Wirecard share price continues its steep drop could be the August 2011 low of 10.48. This was also the price area where the tops of January 2010 are found.
A further support lies at 3.205, site of the lows of December 2008 at the time of the global financial crisis.
A bounce at the next support target may allow for a retracment rally to the 19.70 resistance (February 2013 high), with the July and August 2014 lows around 27.46 coming in as a possible resistance target. However, the odds of a further drop in price are very high, and any retracement rallies may simply become opportunities to re-initiate short positions on the Wirecard share price.