A brief Wirecard update

Wirecard has issued it’s Q1 results. Turnover at the German payments group jumped from €160m in the first quarter last year to €210m in the first three months of 2016.

The results follow a well attended investor day this month, more on which below. While down 2 per cent on Thursday morning, the share price is back above the €40 level it traded at before Zatarra Research & Investigations began publishing on the subject of the company in February.

Note too the proportion of shares sold short remains close to a quarter of the market capitalisation, with 12 declared short positions of more than 0.5 per cent even after the annual cost of borrowing stock has touched 20 per cent in recent weeks. The sceptics appear committed to their positions.

The London Capital Markets Day on May 4 was well attended by longs and shorts. The company started off by announcing some big long term financial targets about where it hopes the business will be in 2020.

Here’s a Berenberg summation which reflects the general sentiment of the longstanding investors:

The key takeaway for us is that management (Markus Braun CEO) gave a confident presentation, the head of India (founder of the business they acquired) also presented well.

India, regular readers will recall, is the focus of much attention as the group’s largest acquisition to date.

One hedge fund analyst (short, and remaining so), told us the day was divided into brisk half hour presentations. After each, “questions would start to escalate”, then Wirecard’s longstanding investor relations professional would step in to keep everything on schedule. Another attendee described the questioning as critical but “couched delicately”, with a mix between sceptics and believers.

The analyst said Ramu Ramasamy, head of the Indian business, came across as more professional than expected, and gave a fairly good answer to a question about whether he had formerly been involved in a lottery business, a sector which has historically been controversial in India.

An investor said Mr Ramasamy denied having previously been involved in a lottery business, “but confused everyone as he also said he and his brother had started a lottery technology company”.

Our understanding of the German company’s position is that neither GI Technology or Hermes, two of the four GI Retail entities Wirecard now controls, have ever been involved in any form of lottery or gaming business.

At each break Mr Ramasamy would be surrounded by attendees, with Marcus Braun, Wirecard chief executive, at his elbow, attendees said.

Since the investor day the share price has risen about a tenth, suggesting some at least have been convinced about the company’s prospects.

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