US-based short seller published its “big one” report on Block Inc alleging the app of fraud facilitation on March 23. The app Co-founded by Jack Dorsey is accused of “wildly” overstating its user count and understating its user acquisition costs.
Jack’s net worth dropped by a whopping $526 million on Thursday and is estimated to be worth $4.4 billion according to Bloomberg Billionaires Index. The 11% plummet in Jack’s net worth is the largest single-day decline in the former Twitter CEO's net worth.
Nathan Anderson backed Hindenburg Research accused Jack Dorsey of taking advantage of the demographic he claimed to be helping. Bloc Inc shot up in popularity after it reported the huge success of its CASH App which lies at the centre of the allegations. Hindenburg report says “the “magic" behind Block’s business has not been disruptive innovation, but rather the company’s willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as a revolutionary technology, and mislead investors with inflated metrics."
In its report, Hindenburg claims Block Inc has inflated user metrics and estimates the stock for a 65% to 75% correction. The correction can be drastic for Jack Dorsey as most of the Twitter Co-founder’s fortune is largely bet on Block Inc. According to Bloomberg, Dorsey holds an estimated $3 billion stake in the company. After the report was made public, Block Inc’s shares dropped by -22% before ending the day’s trading at -14.82%.
Like Hindenburg’s previous target, Adani Group of Companies, Block Inc has said its exploring legal action and has called the report on Cash App “factually inaccurate and misleading.”
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