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Several Hours after Hindenburg, a short seller and a research firm, issued a series of accusations against and revealed a short position against Block, Jack Dorsey’s company published its response and called the report “inaccurate and misleading”. Block also stated it is planning to work with the SEC and that it will explore legal action.
Block Says Hindenburg Report is “Inaccurate and Misleading”
This Thursday, shortly after Hindenburg Research published its scathing report, Jack Dorsey’s Block fired back against the allegations. The press release called the short seller’s accusations “inaccurate and misleading”. It also stated that Block is confident in its products and controlled and described Hindenburg as “well-known for these types of attacks” and alleged their sole purpose is to help short-sellers make a profit:
We intend to work with the SEC and explore legal action against Hindenburg Research for the factually inaccurate and misleading report they shared about our Cash App business today. 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. 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 also stated it is planning to work with the Securities and Exchange Commission and explore possible legal action against Hindenburg. The short-selling company was founded in 2017 and specialized in forensic research aimed at uncovering financial misdeeds. It was named after the Hindenburg zeppelin which single-handedly killed the airship as a mode of transportation due to its destruction in a spectacular accident.
Block Closes 14.82% in the Red After Hindebrug Publishes Report
Hindenburg unleased its report on Block on Thursday along with the revelation it shorted Jack Dorsey’s company and immediately sent its stock into the red. By the end of Thursday’s trading, Block’s shares stood at $61.88—14.82% down from the previous close at $72.65. The report itself contains an onslaught of scathing allegations against Jack Dorsey’s company.
According to Hindenburg, their two-year-long research into Block revealed the company has been making intentionally misleading statements about the size of its user base, that it has been very lenient with regard to illicit activities, and that its KYC practices amount to a ”‘Wild West’ approach to compliance.” Jack Dorsey’s company is accused of “taking advantage of the demographics it claims to be helping.”
Hindenburg already found itself in the news in 2023 for its investigative and short-selling efforts. In late January it labeled India’s Adani Group as the “largest con in corporate history” and accused it of nepotism, using offshore shell companies, and multiple other misdeeds. The report sent Adani’s stocks spiraling down and the firm is more than 50% in the red YTD.
Do you think Hindenburg’s assessment of Block is accurate? Let us know in the comments below.