According to a statement made by Hindenburg Research on Thursday, the Jack Dorsey-led payments company misrepresented its user counts while understating the expense of acquiring new customers.
Block has systematically abused the demographics it purports to be assisting, according to our two-year research, the short seller wrote in a message posted on its website.
Following the story, Block’s stock dropped 18% in premarket trading.
An enquiry for comment from Reuters was not immediately answered by Block.
In its most recent report, the American short-seller, who was responsible for the over $100 billion market decline in Adani Group, claimed that former Block employees believed that 40% to 75% of the accounts they checked were fraudulent, fictitious, or extra accounts connected to a single person.
The allegations made against Block by Hindenburg could not be confirmed by Reuters.
According to Ortex statistics, 5.2% of Block’s free float shares were short as of March 22.
Hindenburg Research is a forensic financial research company that examines equity, credit, and derivatives. It was founded in 2017 by Nathan Anderson. It has a history of exposing corporate misconduct and betting against the corporations. Block, Jack Dorsey’s payments company, is shorted by Hindenburg