Wirecard AG shares slumped after the German payment processor’s Indian business became a focus point again and a Citigroup Inc. analyst said the company faces prolonged uncertainty because of the accounting allegations it’s facing.
The shares lost as much as 10 percent, the biggest intraday drop since Feb. 8.
Wirecard has been drawn into a London lawsuit by former minority shareholders of an Indian business who claim they were cheated out of money before the embattled payments company bought the firm in 2015. The same Indian entity is being investigated by authorities in Singapore for allegations of money laundering and document forgery, German newspaper Handelsblatt reported earlier.
“Given the various developments since the beginning of the year, our view has turned even more cautious as we believe the market is now mis-pricing the risks associated with a prolonged period of uncertainty,” Citi analyst Josh Levin wrote in a note to clients lowering his rating to sell from neutral.
The allegations concerning the Indian transaction aren’t new and have already been refuted several times by external audits, a spokeswoman for Wirecard said by email.
The steep decline in shares offers some equity option traders a potential last-minute profit. Put options with strikes between 115 euros and 105 euros were set to become worthless today as Wirecard closed at 115.10 euros on Xetra Thursday. With shares trading around 105 euros as of 12:13 p.m. in Frankfurt, those options are now in the money.
Wirecard, a star in the German stock market for more than a decade, came under pressure in February after a series of reports in the Financial Times on possible fraud in Asia, causing the stock to drop by almost 50 percent.
