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Delayed financial results for troubled payments specialist Wirecard (FWB:WDI) are due out on Thursday. The German payments group has been battling bad press that has swirled around alleged accounting irregulaties that stretch back to 2016. Data provided by a specialist in artificial intelligence is indicating that investors in Wirecard shares are feeling particularly negative at the moment.

Wirecard is listed in Frankfurt, and specialises in electronic payment systems including processing of virtual and physical cards. It has been operating one of the fastest growing financial commerce platforms in the world and employs over 5000 people globally.  For example, it recently collaborated with Payhawk in Bulgaria on the launch of a corporate Visa card.

So far, detailed examination of Wirecard accounts by KPMG has proved inconclusive for Wirecard investors. EY, it is hoped by many, will be signing off on the company accounts for 2019 this week, but we could be in for something more exciting if they refuse to do so.

Wirecard and KPMG have not been able to agree on Wirecard’s sources of income during the period 2016-18, as Wirecard says it is bound by data protection regulations that mean KPMG is not getting access to the full story for that period.

CEO Markus Braun, whose contract is meant to be renewed in December, may instead by shown the door if EY does not deliver a set of numbers the market can be happy with.

Wirecard investors are feeling negative

According to analysis by artificial intelligence (AI) specialists Irithmics, institutional investors are feeling very negative about Wirecard at the moment. This is not reflected in a share price which has been creeping up over the last couple of weeks. Wirecard shares have been trading up steadily since 21 May when they were trading at €83. At the time of writing, they had just broken €100. They are still well off their 52 week high of €159.

Despite the share price performance, analysis from Irithmics has revealed that all types of institutional investors in Wirecard shares – strategic, tactical and speculative – are expecting a negative outcome of some kind. There seems to be a lack of confidence in the stock. But Irithmics also revealed, based on its AI forecast, that the shares could respond very quickly indeed if the news out on Thursday is positive.

The forecasts, based on data available to the AI as of 15 June 2020, are for the subsequent 30 days. the forecasts change and update daily as new data becomes available to the AI, in a similar way to which weather forecasts are updated daily. The forecasts are not predictions of price or trading signals.

AI analysis of investor behaviour helps corporates assess the degree of asymmetry between investors’ expectations and the financial reality contained in any announcement. The greater the asymmetry, the more extreme the correction in expectations.

Speculative investors likely to back Wirecard for longer

Irithmics also forecast that speculative investors in the stock are likely to remain more positive, for longer, than those with a strategic or tactical approach.

Irithmics’ data is based on analysis of the behaviour of institutional investors in thousands of differents stocks in Europe and further afield. It analyses publicly disclosed holdings data for fund managers and other major investors in the stock market. The views and expectations of institutional investors are not fixed and they can be changed by financial and non-financial data relating to individual companies, sectors and regions.

Much will depend on the outcome of events on Thursday, but the indications are that the Wirecard share price should be higher than it is, based on the attitudes of the bigger investors in Wirecard.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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