2023-03-24 11:44:49 ET
Block Inc ( NYSE: SQ ) remains in focus this morning after Hindenburg Research grilled the financial technology company in its latest short sell report .
Hindenburg’s take on Block shares
Hindenburg accused the multinational this week of misrepresenting the number of genuine active users it has on Cash App. Many of the fake or duplicate accounts on the platform, it added, participated in illicit activities as well.
On Thursday, Block dubbed the report “factually inaccurate” and confirmed plans of exploring legal action against the short seller. But that doesn’t invalidate the reputation of Hindenburg Research. According to CNBC’s MacKenzie Sigalos:
It often doesn’t go well for the company being targeted by Hindenburg. Adani lost more than $100 billion in market cap in a week. So, pretty solid track record of companies not faring well after Hindenburg bet against them.
Block shares have lost about 20% this week.
Wall Street doesn’t share Hindenburg’s concerns
Last month, Block reported a 16% year-over-year increase in its monthly active users to 51 million.
Hindenburg also blasted the tech conglomerate in its report for avoiding a regulatory cap on interchange fees by routing such revenues through a small bank. But MacKenzie added :
This is nothing new. Lots of fintechs benefit from the Durbin amendment by partnering with financial institutions that have less than $10 billion in assets to pull in more from interchange fees.
It is also important to note here that the Wall Street appears to be in a disagreement with the short seller. On average, analysts see upside in Block shares to $97 – up more than 60% from here.
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