Jack Dorsey founded Block is the latest target of Hindenburg research report
New York/IBNS: Hindenburg Research, a US investment group, launched a fresh attack against Block, the mobile payments company founded by Jack Dorsey, accusing it of "widely overstating" its user base, on Monday.
This came two months after the group accused Adani Enterprises of fraud. The publication of the report caused Block's stock to plummet by up to 22% in early trading on Wall Street, though it later recovered somewhat.
As of now, Block's shares are being traded at $62.27, indicating a decrease of 14.29% from its previous value. The stock's value plummeted to the day's low of $56.50, causing an overall decline of 22.22% on the exchange.
Block's stock price was at $72.65 on the preceding day.
Formerly known as Square, Block is a tech company established by ex-Twitter CEO Jack Dorsey in 2009. Its operations involve facilitating financial transactions, including payments between individuals and merchants.
Hindenburg Research alleged that while Cash App's platform was processing billions of dollars in fraudulent transactions, insiders at Block were selling off their stocks worth over $1 billion between March 2020 (the onset of the pandemic) and December 31, 2021.
According to Hindenburg Research, the investigation of Block lasted for two years and involved numerous interviews with former employees and experts. The research group also carried out a thorough examination of documents from regulators and court proceedings.
The company's mobile app, Cash App, has contributed to its rapid growth, which propelled it to a market value exceeding $100 billion in 2021. Currently, Block's market value is valued at $38 billion.