Hindenburg shorts Jack Dorsey’s payments company Block Inc

Washington: Hindenburg Research on Thursday disclosed short positions in Block Inc and alleged that the Jack Dorsey-led payments firm overstated its user numbers and understated its customer acquisition costs.

Shares of Block slid 20 per cent to $57.85 in premarket trading following the report. If losses hold through the session, shares could record their steepest percentage fall since March 2020.

“Our 2-year investigation has concluded that Block has systematically taken advantage of the demographics it claims to be helping,” the short seller said in a note published on its website.

The US short-seller, behind a market rout of over $100 billion in India’s Adani Group, said in its report that former Block employees estimated that 40 per cent-75 per cent of accounts they reviewed were fake, involved in fraud, or were additional accounts tied to a single individual.

Reuters could not verify the claims raised in the report.

Hindenburg added that Block “obfuscates” how many individuals are on the Cash App platform by reporting misleading “transacting active” metrics filled with fake and duplicate accounts.

Hinderburg added that co-founders Jack Dorsey and James McKelvey collectively sold over $1 billion of stock during the pandemic as the company’s share price

soared.