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German Fintech Soon Worth More Than Deutsche Bank

Wirecard AG market valuation stands  at €19.4 billion ($22.5 billion).Wirecard AG market valuation stands  at €19.4 billion ($22.5 billion).

They may be worlds apart in the financial services industry but German payments company Wirecard AG is fast approaching the market valuation of banking behemoth Deutsche Bank AG, capping a week in which investors snapped up shares in Europe’s biggest ever fintech public offering.

Wirecard is hovering close to a record €158.10 in Frankfurt, with shares gaining for a 13th day, marking its longest rising streak since an initial public offering in October 2000, Bloomberg reported.

Its €19.4 billion ($22.5 billion) market valuation, just €470 million shy of Deutsche Bank’s, also makes it a candidate to join Germany’s DAX benchmark index of the 30 largest companies as early as September, when Deutsche Boerse AG conducts its regular index review.

The stock is benefiting from an extension of its partnership with Visa Inc. on payment solutions, announced on June 5, and the successful IPO of Dutch competitor Adyen NV, whose shares almost doubled in value on its first day of trading earlier this week.

“Wirecard is going deeper into an area that could have been of interest for established banks,” said Holger Schmidt, an analyst at Bankhaus Metzler in Frankfurt. “None of the big European lenders is active in this space and they all failed to recognize this long-term trend. This left the door open for non-financial institutions.”

For years, systems for processing payments in stores and online were controlled by major banks, credit card issuers and a litter of longstanding IT suppliers. Wirecard and Adyen are part of a new breed of fintech firms challenging this hegemony, creating more choices for consumers.

Analysts covering Wirecard remain bullish despite a 68% rally this year, with 16 rating the stock a buy and 12 with hold recommendations. None advise selling the shares, which have overshot the average price target by around 12%.

This aside, technical indicators signal some overheating, with the 14-day relative strength indicator at 89 points—the highest since October 2017—deep in overbought territory. Shares have decoupled from their 200-day moving average by around 43% and momentum indicator ADX shows the stock may be poised for a correction.

 

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