We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Block shares are making headlines for all the wrong reasons today, with short-seller Hindenburg Research raising red flags surrounding the company’s operations.
Here’s what the short-seller had to say – “Our 2-year investigation has concluded that Block has systematically taken advantage of the demographics it claims to be helping. The “magic” behind Block’s business has not been disruptive innovation, but rather the company’s willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics.”
That’s a heavy statement.
The stock got punished in retaliation to the report’s release, with Block shares plunging in today’s pre-market session.
Hindenburg claims that fraud is a major problem within the company’s Cash App platform, with the short-seller also not agreeing with SQ’s practice of ‘blacklisting’ users suspected of illegal activities rather than outright banning them from the platform altogether.
“Our research indicates, however, that Block has wildly overstated its genuine user counts and has understated its customer acquisition costs. Former employees estimated that 40%-75% of accounts they reviewed were fake, involved in fraud, or were additional accounts tied to a single individual.”
Clearly, Hindenburg is not a fan.
As we can see in the chart below, the company’s revenue was greatly amplified during the initial phases of the pandemic in 2020.
Image Source: Zacks Investment Research
Still, despite the report and shares nosediving in the pre-market session, SQ shares have temporarily bounced from their $56.50 per share intraday low, finding some buyers.
Of course, Block isn’t the first that Hindenburg has raised alarms on, with companies such as Welltower (WELL - Free Report) and Establishment Labs (ESTA - Free Report) also receiving negative coverage from the short-seller over the last year.
Interestingly enough, Establishment Labs shares are up more than 35% since the short-seller’s report on October 19th, 2022, widely outperforming the S&P 500.
Image Source: Zacks Investment Research
And since publishing their short report on Welltower on December 7th, 2022, shares are up roughly 3%, again outperforming the general market.
Image Source: Zacks Investment Research
SQ shares have already declined significantly in value over the last two years, down more than 70%.
Image Source: Zacks Investment Research
It raises a valid question, whose side are you on?
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
What's Going On With Block Shares?
Block shares are making headlines for all the wrong reasons today, with short-seller Hindenburg Research raising red flags surrounding the company’s operations.
Here’s what the short-seller had to say – “Our 2-year investigation has concluded that Block has systematically taken advantage of the demographics it claims to be helping. The “magic” behind Block’s business has not been disruptive innovation, but rather the company’s willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics.”
That’s a heavy statement.
The stock got punished in retaliation to the report’s release, with Block shares plunging in today’s pre-market session.
Hindenburg claims that fraud is a major problem within the company’s Cash App platform, with the short-seller also not agreeing with SQ’s practice of ‘blacklisting’ users suspected of illegal activities rather than outright banning them from the platform altogether.
“Our research indicates, however, that Block has wildly overstated its genuine user counts and has understated its customer acquisition costs. Former employees estimated that 40%-75% of accounts they reviewed were fake, involved in fraud, or were additional accounts tied to a single individual.”
Clearly, Hindenburg is not a fan.
As we can see in the chart below, the company’s revenue was greatly amplified during the initial phases of the pandemic in 2020.
Image Source: Zacks Investment Research
Still, despite the report and shares nosediving in the pre-market session, SQ shares have temporarily bounced from their $56.50 per share intraday low, finding some buyers.
Of course, Block isn’t the first that Hindenburg has raised alarms on, with companies such as Welltower (WELL - Free Report) and Establishment Labs (ESTA - Free Report) also receiving negative coverage from the short-seller over the last year.
Interestingly enough, Establishment Labs shares are up more than 35% since the short-seller’s report on October 19th, 2022, widely outperforming the S&P 500.
Image Source: Zacks Investment Research
And since publishing their short report on Welltower on December 7th, 2022, shares are up roughly 3%, again outperforming the general market.
Image Source: Zacks Investment Research
SQ shares have already declined significantly in value over the last two years, down more than 70%.
Image Source: Zacks Investment Research
It raises a valid question, whose side are you on?