Alright guys so I thought I found it I thought I found. The next stock I was going to invest in but it turns out they’re a fraud so here’s what I’m gonna do in this video first I’m gonna tell you what this company is. And what they do and why I like them so much second I’m gonna talk about what happened to them that made their stock price fall 70% and third I’ll.
Talk about what I need to see happen before I invest in this stock so let’s get right into it. The company I’m talking about is wire cars if you’ve never heard of wire card before they are based out of Germany and. They are a payment processing company this is their investor presentation and wire card is the fastest growing financial commerce platform of course these are all of the trends driving cashless payments we see. That here with all the companies like Square and PayPal and so you can really think of this company.
Like the square of Europe this company essentially does the same thing except they are. In Germany and are focused on the European market they’ve also.
Launched the first payment app with fully digital banking services in Europe it’s called boon so that is also a very good thing they have going for. Them and they just started entering the market in China so they are buying a Chinese company and they’re planning to expand into the Chinese market to get market. Share there so overall this company is doing a lot of good things and now we’ll get to.
The interesting part why I like this company so much so these are. The financial statements of the company this company trades on the over-the-counter. Markets for the US so if you want to buy this. Stock in the u.s. they’re taker is wcag why and that’s for wire car that’s. For the ADR for the shares that trade on the US market so this is their income statement and what. I love about this company is the consistency and just the extreme growth they’ve been seeing from 2014 to 2018 revenue grew.
From 600 million to over 2 billion and we can go down and the net income grew from a hundred million to three hundred forty-seven million so all of. These metrics are just going up very consistently we can also take a look at their cash flow statement and we see the free. Cash flow has been growing at a tremendous pace there you made seven hundred and 14 million in free capital last year so this is an outstanding company this is definitely the type of.
Company that I would invest in because it’s obvious they have a come of advantage they. Have a management team that knows how to murder the company and they’re throwing. Off crazy numbers of income and free cash flow compared to the value of the company now let’s talk about why I was thinking about buying this stocks so I was watching Bloomberg a couple. Days ago and there’s a segment about how wire car dropped 40% in one day and we can see that over the past two days they’ve dropped 75% this. Company’s lost three-quarters of their value in the past two days and so when I see a company that looks as. Great as list that just fell 75 percent I want to see what happened obviously it wasn’t a small thing obviously most investors think that the survival.
Of this company is at risk so I went to look into what happened with a wire card and there is a very big problem with wire card right now. During the audits for their annual report their auditor Ernst and Young said they could not find 2.1 billion dollars that the company said they had on their balance sheet and so this. Cash this two billion dollars represents a quarter of the balance sheet of this company when you take a look at this.
Situation it looks pretty bad wire cards said they had two point 1 billion dollars in trustee bank accounts that were in the Philippines a wire card said they had two point 1 billion dollars. In Philippine banks and when the auditors tried to get to them these the same banks said we have no idea who this company is we. Don’t do business with them so obviously someone messed up here there’s two point 1 billion dollars missing from balance sheet.
And sort of make things even worse the banks that have. Lent this company money say that if their annual report was not published by today June 19th then they could terminate their loans of around 2 billion euros and they would. Instantly set them due and that would make the company pretty much insolvent they only have around 2 million dollars of cash a verified cash on their balance sheet so calling in 2 billion dollars. Of loans at once would definately wipe out this company so that’s the situation we’re in right now this company is missing a quarter of their balance sheet the cash is. Not there they said the cash was in a Philippines bank account and that Bank has come out and said we have never done business with liar.
Cards so that is the situation right now it looks like there’s some fraud going on it. And so this is a company that has been doing extremely well in the German stock market and so this has definitely.
Hurt a lot of people this stock recently got added to the dax index which. Is essentially like the Dow Jones of Germany so this is a company that a lot of people were invested in. And so this death has the potential to become a company that becomes something like the next Enron that was also a fraud and. I read something that says the 2.1 billion dollars that’s missing represents all. This company’s profits from 2012 so this is true if the 2 billion in cash is really made up and wasn’t there then. That means that this company falsified all their profits for the past seven to eight years and so I’m still thinking of investing.
In this company as crazy as all that sounds but I’m waiting because I need to see a. Few things happen before I even consider putting my money into this company right now there’s no.
Chance I would do it but if a few key things happen then I would consider taking a small stake in this company the first thing I have. To see is that everyone involved with this fraud gets fired from the. Company and we’ve already seen that start the CEO recently stepped down and the CEO recently got fired and so. Ultimately I think it probably goes deeper than that I think the majority of the management should be replaced because obviously they knew what. Was going on so the second thing I need to see happen is.
That I need to see at least a portion of. That 2.1 billion dollars found so you can think of this as a couple scenarios I like to think in terms of the worst case in the best case for the. Situation so when you look at this situation what’s the best case scenario.
For me I think the best case scenario out of the situation is that there are somehow a huge misunderstanding between the auditors and the bank and wire card and. So there’s a big mix-up and the cash really is there somewhere but the auditor. Just couldn’t find it for some reason and they will clear up the confusion and they will find that. The cash is in fact there and in terms of the worst case scenario is probably that. They really did fabricate these 2.1 billion dollars and so.
They really falsified their earnings over the last eight years and so what really happened is probably. In between those two extremes somewhere but if I invest in this company I need to see them recover at least a portion of the 2.1 billion in cash because if it’s all fake that. Means that all of this company’s earnings were falsified and the earnings growth. Was what made me like this company so much in the first place.
So if that’s not there then this company isn’t as high-quality. As I thought they were and the third thing that needs to happen and the third thing I need to see happen is that wire card and its lenders reach an agreement. About the two billion dollars in loans that is coming due so the original report said two billion of dollars worth of wire cards loan. Could be called in to des jeux 19 if they.
Did not file their annual report by today and as of now I don’t see any news saying that they did so I’m assuming that they didn’t file the annual report. But they are in talks with their lenders so I’m waiting to see what happens with that if the banks decide to say hey we’re calling in our loans now we don’t trust. You anymore then this company is going to default there’s no way they can meet two billion dollars worth of obligations with the cash they have so I’m waiting. To see if they can work something out where they can extend their loans or renegotiate when they’re gonna. Be paid to really keep this company alive and so those are the three things I’m looking to see happen before I invest in this. Company you know it’s still at this point it’s a huge risk because it’s all up in the air this.
Company could be the biggest fraud since Enron but on the flip side if there is somehow. A misunderstanding and that cash is there somewhere this company is extremely undervalued here you just look at back in 2018 there are over 100 bucks and right now they’re at 13 so. If this situation they’re in right now it turns out to be not as bad as they thought then.
The truth is this company could be a ten bagger in my opinion at the price is trading at right now again assuming that their earnings were real then this company was. An extremely fast grower and that wasn’t gonna slow down anytime soon so if we do see things turn around. And we see everything clear up there could be a huge jump in the price of this company so right now I’m not doing anything they’re.
Still way too many unknowns so I’m waiting to see. What happens with this missing 2 point 1 billion dollars does. It come up somewhere or it was it all fake that’s really what I’m waiting to see if it turns out that it’s all fake then I’m staying far away from this company because.
I cannot trust any of their earnings history over the past eight. Years so those are my thoughts on this stock I’ve been looking for another stock to invest in I thought this was gonna be the one until I looked into it and saw.
What happened with them so I will keep you guys updated I will post a video if I do decide to buy in or if anything. Happens with the situation and a lot of you have commented and. Asked me to look at some stocks outside of the US whether that’s in Canada or Europe and so that’s what I’ve been starting to do let me know if. You want me to make a video on Canadian stock through european stocks or and throw a couple names out there that I can. Look at and that’s pretty much it for this video I will make an update if I decide to buy or anything changes so if you like this. Video hit the thumbs up button so if grab to the channel if you haven’t already and I’ll see you on the next video.