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Block (ASX:SQ2) attacked by a short-seller
Nick Sundich, March 24, 2023
Jack Dorsey-led fintech Block (ASX:SQ2) has been attacked by short-seller Hindenburg Research.
Hindenburg has essentially alleged the entire company is a fraud while SQ2 has predictably denied the allegations and threatened legal action, as most companies in this position do.
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Hindenburg’s allegations
Hindenburg Research claimed to have conducted a 2-year investigation into the company, interviewing former employees and industry experts, reviewing regulatory and litigation records and financial modelling.
Among its allegations were that it overstated its user counts, understated customer acquisition costs and failed to take action against criminal activity being done using the app.
The report led to the company’s shares falling over 16% this morning. It debuted on the ASX in February 2022 after acquiring Afterpay.
Block (ASX:SQ2) share price chart, log scale (Source: TradingView)
Block response
The company released a short statement on its website in which it denied the allegations and said it would explore legal action against Hindenburg.
‘We are a highly regulated public company with regular disclosures, and are confident in our products, reporting, compliance programs, and controls,’ it said.
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