Short seller Hindenburg targets Jack Dorsey’s Block

Published March 26th, 2023 - 09:27 GMT
 Hindenburg targets Jack Dorsey’s Block
Shutterstock image


ALBAWABA — Hindenburg Research on Thursday found itself a new target, Jack Dorsey’s Block, releasing a scathing report that alleges the company allowed fraudulent accounts that obscure criminals involved in illegal or illicit activities, among other things.


Block, the company behind Cash App, which also owns Square, Weebly, Afterpay and music-streaming service Tidal, saw its shares slide 15 percent on Thursday after the report came out and another 1.94 percent to close at $60.68 on Friday.


Hindenburg’s attack on Block comes two months after the short seller attacked Adani Group erasing billions of dollars from the Indian conglomerate’s market value.


“Our 2-year investigation has concluded that Block has systematically taken advantage of the demographics it claims to be helping,” Hindenburg said in its report.


Block benefits from “a willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics”, the report says. 


The research firm said Block’s Cash App thrived on serving unbanked customers, highly inflated its transacting user base and allegedly using compliance programs that are deficient.


Hindenburg makes money by short selling the stocks of the companies associated with its reports and is poised to benefit from Block’s share slide.


According to Bloomberg, Hindenburg has targeted nearly 30 companies since 2020 and on average targets lost about 15 percent the day the reports were released.


Block said it intends to work with the Securities and Exchange Commission and is exploring taking legal action against Hindenburg “for the factually inaccurate and misleading report they shared about our Cash App business today”. 


"We are a highly regulated public company with regular disclosures, and are confident in our products, reporting, compliance programs, and controls. We will not be distracted by typical short seller tactics," Block said in a press release.


“Hindenburg is known for these types of attacks, which are designed solely to allow short sellers to profit from a declined stock price. We have reviewed the full report in the context of our own data and believe it’s designed to deceive and confuse investors,” added Block.



You may also like


Sign up to our newsletter for exclusive updates and enhanced content