Trading: how calls to short stocks collapsed 22% quotes

There are many embarrassing moments for companies, but being the subject of a Hindenburg Research investigation is probably one of the most embarrassing things. The investment firm has now targeted the Block project.

Block is the parent company of Square, Cash App, BNPL’s Afterpay and music streaming service Tidal, and its CEO is Twitter co-founder Jack Dorsey. Block’s share price plummeted 22% on Thursday, March 23 following the publication of an investigation by Hindenburg Research.
Block is a cryptocurrency-friendly company. Using the Cash app, you can not only receive and send digital coins, but also buy stocks and bitcoins there. Calls to short stocks are also directed specifically at the application. Block has been in trouble lately. After the stock plunged, the company had to post a big loss for fiscal year 2022.

Hindenburg Research accuses Block of multiple abuses, most notably “inflating user metrics” and a scam that allegedly allowed insiders to “earn over $1 billion”. The investigation, interviewing dozens of former employees, partners and industry experts, and examining numerous documents about the company took two years. It was concluded that between 40 and 75 percent of the estimated 51 million monthly active Cash app accounts are either fake, fraudulent, or repeat user accounts.

Currently Block Inc. is valued at $41 billion, just a third of what it was worth in 2021 ($127 billion).
Thanks to the hassle-free technology, users could receive government payments through the Cash App “instantly,” according to Hindenburg Research.

Block’s involvement in the Buy Now, Pay Later (BNPL) business is also being discussed. In January 2022, Block paid $29 billion to acquire Australian-based AfterPay. The company faced additional challenges. The Afterpay project was designed to circumvent Australia’s responsible lending regulations by providing users with a form of credit without proof of income or credit checks.

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