On Thursday, Hindenburg Research disclosed short positions in Block Inc (SQ.N) and claimed that the Jack Dorsey-led payments firm overstated user numbers and customer acquisition costs.
Block fell 20% to $57.85 in premarket trading after the report. Shares may fall the most since March 2020 if losses continue.
“Our 2-year research has established that Block has consistently taken advantage of the demographics it purports to be serving,” the short seller said on its website.
Block didn’t respond to Bloomberg’s request for comment.
The U.S. short-seller behind a $100 billion market meltdown in India’s Adani Group reported that former Block workers believed that 40%-75% of accounts they assessed were phony, fraudulent, or extra accounts related to a single individual.
These assertions were unconfirmed by Bloomberg.
Hindenburg said Block “obfuscates” Cash App’s user count with fake and duplicate “transacting active” metrics.
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