Jack Dorsey’s fintech company Block Inc (NYSE:SQ) is responding to a Thursday short report issued by Hindenburg Research that accuses Block of misleading investors and taking advantage of the people it claims to help.
Block Says Short Report ‘Misleading’: Hindenburg said Block intentionally misled investors by disguising “predatory” loans and fees as revolutionary technology, overstated user growth while understating costs for acquiring customers and added that 40% to 75% of accounts could be fake.
In response to the allegations, Block said it intends to work with the SEC and explore legal action against Hindenburg for a “factually inaccurate and misleading” report about Block’s Cash App business.
A “highly regulated public company with regular disclosures,” Block said it is confident in its products, reporting, compliance programs and controls. The company said it reviewed the full Hindenburg report in the context of its own data and said it’s designed to deceive and confuse investors.
In January, Hindenburg targeted Indian multinational holding company Adani Group in January and its founder Gautam Adani, accusing him of fraud and sending his wealth plunging.
Benzinga reported earlier that Dorsey, who is CEO of Block — and co-founder of Twitter — was targeted personally by Hindenburg, who said Dorsey’s public mentions of its Cash App product in songs was used as evidence of its mainstream appeal.
Yet Hindenburg said many of the artists who mentioned Cash App in songs were talking about using the app for criminal activity.
Block is a global tech company that focuses on financial services. Its ecosystem of commerce solutions, business software and banking services that include Square, Cash App, Afterpay, web hoster Weebly and music streaming platform Tidal.
SQ Price Action: Shares of Block Inc are trading 16.3% lower due to the Hindenburg report at $60.81, according to Benzinga Pro.
Photo courtesy of Square.