In Response To The Hindenburg Report, Block Says, “It Is Known For These Types Of Attacks”.”

To promote growth and profit from the facilitation of fraud against customers and the government, in our opinion, has deceived investors on important metrics, supported predatory products, and adhered to compliance worst practices. Block’s stock plunged over 20% in morning trade before rebounding somewhat to conclude trading down 15%. In retaliation, Block stated that it planned to “take legal action against Hindenburg Research.

Block said in a statement that “Hindenburg is renowned for these sorts of attacks, which are geared purely to help short sellers profit from a falling stock price. We examined the entire report in light of our data and concluded that it was intended to mislead and perplex investors.

Block has been the most well-known target of as a result of Hindenburg company whose business entails writing research papers that harshly criticise companies and then regularly waiating that their shares will decrease, a strategy known as short selling. The Adani Group, an industrial giant founded by Indian billionaire Gautam Adani, received the Hindenburg report and saw a significant decline in market value.

In 2009, Mr.Dorsey and Jim McKelvey established Block, which was formerly known as Square until the end of 2021. First designed as a platform for businesses to accept credit cards, it ultimately added Cash App, buy-now, pay-later platforms after pay, and streaming music provider Tidal through acquisitions. 

According to Hindenburg’s analysis, Block’s Cash App platform was replete with false accounts that unnaturally inflated its user numbers. More concerning is what the short seller claimed to be a lot of illicit activity on Cash App, such as payments for sex trafficking and illegal drug transactions. Hindenburg’s report included as supporting evidence several audio clips that spoke about using Cash App to buy narcotics or try murder.

The investment business also referenced figures from state agencies, including Ohio and Massachusetts that indicated a greater rate of false pandemic relief applications using Cash App than conventional banking systems.   Also, the investigation charged Block executives with disobeying employee and regulatory concerns regarding possible pandemic relief fraud.

Executives like Mr. Dorsey sold millions of dollars worth of stock as a result of Block’s share price increase during the epidemic, which the company said was due to the surge of online commerce but which Hindenburg claimed was partly due to fraud committed on its platforms. 

Hindenburg hits once more, this time costing Jack Dorsey $526 million.

Jack Dorsey, a co-founder of Block Inc., has lost more than $500 million as a result of a report on the payments company by US short-seller Hindenburg Research. Hindenburg Research said in its study that the payments company Block, run by Jack Dorsey, “overstated its user numbers and understated its client acquisition expenses.” As Hindenburg disclosed that it had taken short positions in the stock and added that the payments company had deceived investors, shares of Block fell sharply.

After the publication of the study, shares of Block fell by over 22% and closed the overnight trading session on the New York Stock Exchange at 14.82% lower at $61.88. The disclosure decreased Dorsey’s net worth in addition to causing a decline in Block’s market capitalization. The largest single-day loss in the founder of Twitter’s fortunes since May was $526 million on Thursday. According to the Bloomberg Billionaires Index, his net worth has decreased by 11% to around $4.4 billion right now.

Two months after shaking the Adani group, US research company ‘Hindenburg Research’ released yet another shocking report. This time, Block Inc., an American payment business, is the target. This week, a new report was released on the Block Inc. payments company, which Jack Dorsey leads. Amrita Ahuja, the company’s Indian-American CFO, has also come under fire amid the claims for reportedly dumping the company’s shares.

Jack Dorsey, James McKelvey, and other executives, including Cash App’s lead manager Brian Grassadonia and Chief Financial Officer Amrita Ahuja, have been charged by Hindenburg Research of dumping millions of dollars in shares, Co-founders Jack Dorsey and James McKelvey sold more than $1 billion worth of stock during the epidemic as Block’s value skyrocketed as a result of its facilitation of fraud.   Other executives, including Cash App’s lead manager Brian Grassadonia and CFO Amrita Ahuja, also sold millions of dollars worth of shares.

Block, Jack Dorsey’s payment company, now has Amrita Ahuja as its Chief Operational Officer and Chief Financial Officer. She also has positions on the boards of directors for Discord and Airbnb. Moreover, Ms. Ahuja served as CFO for game developer and publisher Blizzard Entertainment. Ahuja received an offer to become Square Inc.’s CFO in 2018. According to a source, the corporation will change its name to Block in 2021.

Ms. Ahuja previously held positions at Fox and Walt Disney Co. She worked for Disney as a Senior Analyst in Strategy Planning and Fox helped to establish Hulu, a streaming service. She also worked as an investment banking analyst for a short time at Morgan Stanley. Amrita Ahuja earned a bachelor’s degree in economics from Duke University and went on to earn an MBA from Harvard Management School. The London School of Economics and Political Science is where she received her education (LSE).

What Ahuja Said About the Allegations?

In response to the findings, Hindenburg stated, “Our two-year research has found that Block has consistently abused the populations it purports to be assisting. Hindenburg has also charged Block’s management with manipulating the expenses associated with acquiring customers.

Ahuja was reported in the article as saying, “In each of those categories, we estimated a client acquisition cost of $5 in 2020 and less than $5 in 2021. And that’s even though our network now has 36 million monthly active users, up 50% year over year. This amount of under $5 is far less than what a conventional financial institution would offer.

Customers can refer new users to Cash App for little to no cost.us,” according to Ahuja, who explained that Cash App achieves this low cost through network effects.  The report went on to say, “We strongly suspect Block’s reported cost of acquiring each new “transacting active” account is deceivingly low given that a single person may create dozens or hundreds of accounts, some of which may be fake or fraudulent.

What is short selling, and what exactly is Hindenburg Research?

You’ll likely become wealthy and everyone will be content if you purchase low and sell high. Short selling involves selling low after borrowing high, and while it may make you wealthy, many people are likely to be upset. Short sellers, according to their detractors, manipulate the market and distort prices through their actions. “Shorts” claim they maintain the integrity of markets and businesses. A slew of unfavorable reports from the short-selling company Hindenburg Research, which targeted businesses connected to Twitter co-founder Jack Dorsey and Asia’s richest man Gautam Adani. 

Unless the stock increases, short sellers borrow shares, sell them, purchase them back at a discount, and profit from the difference. Then they may lose money instead. The majority of shorting is carried out by hedge funds and institutional investors to protect their holdings from declining stock prices or to wager that share prices have increased excessively. 

Hindenburg conducts research on companies to identify targets that they assert have questionable business or accounting practices, disseminate the information and, if all goes according to plan, drive the shares lower.Activist shorts have been criticizing corporations for years, but their popularity has increased as a result of the popularity of social media as a channel for the dissemination of ideas and research.

What is Hindenburg Research? 

Short seller Nathan Anderson founded Hindenburg, which describes itself as a forensic research organization that invests its own money in Hindenburg holdings. In 2020 and 2021, Wall Street took note of Anderson’s firm because it highlighted serious worries about Nikola and Lordstown Motors, two electric car makers.

In February, it gained further recognition when it released a 100-page investigation accusing the Indian conglomerate Adani Group of employing a network of companies in tax havens to increase earnings and stock prices while debt grew. Adani claimed the accusations were false and called them a “calculated assault against India.”

Is short selling prohibited?

During the Great Depression, the United States cracked down on short selling and followed the United Kingdom, Germany, and Japan in regulating or prohibiting it during the 2008 financial crisis.China’s regulator blamed “malicious” short selling in part for the 2015 stock market meltdown, imposing restrictions and detaining traders.

Edited by Prakriti Arora