While risk assets are not looking good as investors turn to gold and bond over the fears of the rising coronavirus cases. Worldwide, COVID-19 confirmed cases have surpassed 10 million and 2.6 million in the US.
But yet another stock of a bankrupt company soared more than 180%. In 2020, the hot trick is to go bankrupt and the shares pop.
As we reported, earlier this month; Hertz, Pier 1, Whiting Petroleum, and J.C. Penney all declared bankruptcy and their shares surged at least 70%
This hot trend is continuing with German scandal-hit payments company Wirecard, whose shares dropped as low as $1 on the weekend from over $100 less than two weeks back only to jump to $3.37 today.
Alright, looks like this is happening…
Wirecard up 150% From Friday's lows. pic.twitter.com/IyWur0IIvU
— Mati Greenspan (@MatiGreenspan) June 29, 2020
This pump in the shares of WDI could be a dead cat bounce, a temporary recovery in the price of an asset from a prolonged decline that is followed by the continuation of a downtrend.
There have also been reports that the French payment processor Worldline and other private investors are interested in buying the part of the company. Moreover, Wirecard said it would proceed with business activities after filing for insolvency.
On Thursday, the company filed for insolvency proceedings just days after it acknowledged that the $1.9 billion euros ($2.1 billion) that were nowhere to be found probably never existed.
Wirecard carried out “an elaborate and sophisticated fraud,” said the company's long-term auditor EY. The company owes creditors €3.5 billion ($3.9 billion).
Wirecard is not the only that is getting a beating, European Commission opened an investigation into Germany's financial regulator (BaFin) for failing to catch the problems in the company despite several reports of wrongdoing. EY is also facing litigation from bondholders and shareholders who are saying the auditor didn't do its job.
Better governance is to have funds trackable on the blockchain. WhaleAlert do most of the job already, and other 3rd party analysis tools abound. https://t.co/iTny8lz5ZP
— CZ Binance 🔶🔶🔶 (@cz_binance) June 29, 2020
Wirecard also has a connection to crypto space as it supports a number of crypto cards, those issued by Crypto.com and TenX.
Companies are asked to stop all activity on card programs in the UK and Europe as such Crypto.com is now working on transferring the card program to a new provider.
Update: For all Europe / UK MCO Visa Cards, all credits have been processed successfully to cardholders’ crypto wallets equivalent to the fiat balances held on the cards.
— Crypto.com (@cryptocom) June 26, 2020
The company assured that customer funds are safe and all the funds are converted into stablecoins viz. TGBP and USDC and credited to the crypto wallets of card holders.