Hindenburg Research alleged that Block's Cash App was facilitating scammers.
👉 Background: Hindenburg Research is an investment firm that specialises in short selling. It calls out companies that is suspects is doing the wrong thing. And then, over the long term, Hindenburg makes money out of the company’s downfall.
👉 What happened: Late last week, Hindenburg released a new, two-year investigation into Block. It alleged that Block’s popular Cash App was facilitating scammers, who were taking advantage of government-stimulus programs during the pandemic.
👉 What else: Block was also alleged to have facilitated payments for criminal activity including sex trafficking and drug dealing. After all this, shares in Block slumped more than 18 per cent... and now, Block intends to explore legal action against Hindenburg.
💡The views of short sellers and activist investors can have a lasting impact on company valuations.
💡Since 2020, Hindenburg has targeted about 30 companies. And the shares of those companies have lost about 15 per cent on average the next day. But six months later, the shares were down 26 per cent on average.
💡Since Hindenberg’s report on Adani, the conglomerate’s Adani Enterprises has dropped 48 per cent. So, Hindenburg may have just landed a killer blow on Square…
Sign up for Flux and join 100,000 members of the Flux family
