Logged-out Icon

Home / Consumer Tech

Jack Dorsey’s Block is the new target of Hindenburg Research

Jack Dorsey

The co-founder of Block Inc.,  Jack Dorsey, has lost over $500 million due to a report by Hindenburg Research on the payments company. In its research, the US short-seller accused Dorsey’s  Block of “overstating its user counts and understating its client acquisition costs” and understating its customer acquisition costs.

Block shares fell sharply after Hindenburg revealed that it had taken short positions in the company’s stock and claimed that the payments company had deceived investors. The
shares fell over 22 per cent and closed the overnight trading session on the New York Stock Exchange 14.82 per cent lower at $61.88.

Other than degrading Block’s market capitalization, the report also resulted in the loss of  Dorsey’s personal net worth. Twitter founder’s net worth fell by $526 million. According to the Bloomberg Billionaires Index, his net worth has decreased by 11 per cent and is estimated to be around $4.4 billion.

The Hindenburg Research claims that Block’s user numbers are exaggerated, and the company has a downside of 65 to 75 per cent “on a purely fundamental basis.”

Reportedly, Block is preparing to sue the short seller.

The short seller also claimed that Block’s stock increased due to its facilitation of fraud, during which, co-founders James McKelvey and Jack Dorsey sold more than $1 billion worth of stock. “Other executives, including CFO Amrita Ahuja and the lead manager for Cash App Brian Grassadonia, also dumped millions of dollars in stock,” said Hindenburg.

Earlier in January, the Adani Group, owned by industrialist and billionaire Gautam Adani, became the target of a Hindenburg report, which resulted in the loss of ten publicly traded companies that make up the Adani Group, wiping out up to $150 billion in market capitalization. The Adani Group has denied the report. The shares of Adani Group firms have now stabilized.

 

Advertisements