Shares of Jack Dorsey's payment company Block fall as short seller issues negative report
By Anviksha Patel and Emily Bary
Block calls short seller commentary 'factually inaccurate and misleading'
Hindenburg Research, a company that typically wagers that shares of a company will fall in value, identified Block Inc. as its most recent target Thursday, accusing the payments company of "reporting inflated user metrics."
Shares of the company, which is the parent of Square and the Cash App, were down about 15% in Thursday afternoon trading after being off by as much as 22% earlier in the session.
Hindenburg alleged that Block (SQ) "inflated user metrics" and "embraced predatory offerings." Hindenburg has taken a so-called short position in Block's stock, where the investor will profit as the payment platform's shares skid lower.
In a statement posted on its website, Block countered the Hindenburg claims. "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."
Block said it has "reviewed the full report in the context of our own data" and sees it as "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," the company wrote. "We will not be distracted by typical short seller tactics."
Hindenburg teased late Wednesday that it was preparing to launch a new report.
The activist short seller, founded by Nathan Anderson, is known for most recently betting against shares of Indian conglomerate Adani Group. All the Adani-linked companies' shares slumped after the January report.
Adani executives met with investors in late February. An Indian Supreme Court independent panel was opened earlier this month to investigate Hindenburg's allegations.
-Anviksha Patel
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March 23, 2023 15:46 ET (19:46 GMT)
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