Fintech Jack Dorsey shares plunge following Hindenburg Research allegations
The company’s experts concluded that the Block payment platform was misleading investors. Previously, a report by Hindenburg Research led to a collapse in the capitalization of the Adani Group by more than $100 billion.
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Shares of fintech company Jack Dorsey Block fell 17% to $60.9 in premarket trading on the New York Stock Exchange as of 4:21 p.m. ET. After the opening of the main session, the fall in securities accelerated to 22%, and the price dropped to $56.5 per share.
Selling started in Block shares following Hindenburg Research stated, which made a bet on the fall of Block shares. Hindenburg Research reported that the payment platform inflated the number of its users and underestimated the cost of customer acquisition. According to the company, Block’s flagship Cash App is also highly popular for serving non-bank customers, meaning people who have been involved in criminal or illegal activities.
In addition, in the study, the company said that former Block employees estimated that 40-75% of the accounts they viewed were fake, involved in fraud, or additional accounts associated with one person.
Hindenburg Research’s research includes dozens of interviews with former Block employees, partners and industry experts, an extensive review of regulatory and court documents, and other data.
Business empire of Indian Gautam Adani lost $100 billion of capitalization
The American company Hindenburg Research is looking for hidden problems in public companies in order to capitalize on the collapse of their quotes. In January, it published a study that triggered a drop in the value of India’s Adani Group companies by more than $100 billion. In the study, the company accused the Adani Group of numerous financial irregularities and market manipulation. The Adani Group conglomerate denied the accusations, calling the report fake, and announced plans to file a lawsuit.
In September 2020, Hindenburg Research released a report on electric vehicle manufacturer Nikola, which was considered Tesla’s main competitor. The authors of the report called the startup “an intricate fraud built on lies,” noting that “they have never seen a fraud of this magnitude in a public company.” The report provoked a fall in Nikola shares and the criminal prosecution of the company’s founder, Trevor Milton, informed Bloomberg. According to the agency, in October he was convicted of investor fraud.
A devastating report was released regarding Tesla’s competitor. Shares collapsed by 12%
According to calculations Bloomberg News, since 2020, Hindenburg Research has released research on regarding 30 companies whose shares lost an average of regarding 15% the next day.
Marina Mazina.
