Assorted credit and debit card machines sit at a payment counter at a Hindustan Petroleum Corp. gas station in New Delhi. (Photographer: Prashanth Vishwanathan/Bloomberg)

This German Fintech May Soon Be More Valuable Than Deutsche Bank

(Bloomberg) -- 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 euros in Frankfurt, with shares gaining for a 13th day, marking its longest rising streak since an initial public offering in October 2000. Its 19.4 billion-euro ($22.5 billion) market valuation, just 470 million euros 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.

This German Fintech May Soon Be More Valuable Than Deutsche Bank

“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 percent 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 percent.

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 percent and momentum indicator ADX shows the stock may be poised for a correction.

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