The Hindenburg Report Targets The Jack Dorsey Company
Internet billionaire Jack Dorsey is under fire after a study claimed that the payments company he runs fudged user counts and catered to criminals. When the company, “Block,” denied the allegations, its stock fell 15%.
The article was written by short-seller Hindenburg Research, which is renowned for going after well-known targets like Indian businessman Gautam Adani.
The business makes money by speculating that stock prices will decline, and it stands to gain from the decline. For the factually wrong and deceptive report, Block, which the former CEO of Twitter, Mr. Dorsey, co-founded in 2009 and currently serves as chief executive, said it was considering legal action.
“As a heavily regulated public firm with frequent disclosures, we have faith in the quality of our reporting, compliance programmes, and controls.” Common short-selling strategies won’t divert our attention.”
Block, formerly known as Square, became well-known for its sleek, white credit card reader, which was well-liked by small-business owners and vendors at farmer’s markets. When the company went public in 2015, its stock price reached almost $3 billion (£2.4 billion).
The company, now valued at more than $30 billion (£24.4 billion), changed its name to Block in 2021 to better reflect the “Cash App,” the subject of Hindenburg’s report, which is a payments app that is rapidly growing.
Asserted Hindenburg Block provided false user data that it claimed was connected to illegal activity, such as sex trafficking.
Hindenburg claimed that while conducting its investigation, it had easily created obviously fictitious “Cash App” accounts in the names of Donald Trump and Elon Musk and submitted public records requests, which allegedly revealed that Cash App was used to enable millions in fictitious pandemic relief payments from the government.
Fears of a slowdown in the economy and consumer spending have already taken a toll on Block’s stock. The crypto currency industry, whose values have fallen, is connected to Cash App as well.
In 2021, Mr. Dorsey, who had alternated between running Twitter and Square, resigned as the social media company’s CEO. Afterwards, billionaire Elon Musk acquired Twitter for $44 billion (£35.8 billion).