Hindenburg Research Attacks Fintech Giant Block with Short Report – The Average Joe

    Hindenburg Research Attacks Fintech Giant Block with Short Report

    Victor Lei — Head of Research

    March 23, 2023

    March 23, 2023

    Two words you never want to be associated with your company: Hindenburg Research.

    Hindenburg is famous for betting against companies with their short reports. They famously erased $100B+ in Adani Group’s market value — and exposed EV startup Nikola’s fraud, which led to its CEO’s criminal prosecution.

    Now they’re back with a 17K+ word report attacking fintech giant Block (NYSE:SQ) — formerly Square — sending $SQ down 15% yesterday.

    It’s a story of high-stakes growth and fraud — except it reads like an encyclopedia.

    But don’t worry. We got the highlights for you:

    • Block “wildly overstated its genuine user counts and has understated its customer acquisition costs.”
    • The company embraced serving criminals, making it easy to mass-create accounts for fraud and scams.
    • Former employees said the platform was filled with scam accounts and fake users.
    • Loose compliance standards made it easy to facilitate unemployment and COVID payment fraud.

    On Block’s fundamentals: Hindenburg expects 65-75% downside to $SQ — saying Block is overvalued, faces competitive threats from Zelle, PayPal and Apple, and insiders have already cashed out billions in stock near its peak.

    Note: Hindenburg stands to benefit from $SQ going down — and not all of their reports have been successful.

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