Washington: Hindenburg research on Thursday confirmed that they have taken a short position in Block Inc., alleging that Jack Dorsey’s payment firm overstated its user counts and understated its customer acquisition cost.
According to the research report, “Our 2-year investigation has concluded that Block has systematically taken advantage of the demographics it claims to be helping.”
NEW FROM US:
Block—How Inflated User Metrics and "Frictionless" Fraud Facilitation Enabled Insiders To Cash Out Over $1 Billionhttps://t.co/pScGE5QMnX $SQ
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— Hindenburg Research (@HindenburgRes) March 23, 2023
The report further added that “the “magic” behind Block’s business has not been disruptive innovation, but rather the company’s 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.”
According to a Reuter report, shares of Block reportedly fell 18% in premarket trading after the report.
The Hindenburg research in the report alleged that “Block has wildly overstated its genuine user counts and has understated its customer acquisition costs. Former employees estimated that 40%-75% of accounts they reviewed were fake, involved in fraud, or were additional accounts tied to a single individual.”
Earlier, the Hindenburg research raised concerns about shares of Adani Group companies having a possibility of declining from their current levels, owing to high valuations.
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