Two words you never want to be associated with your company: Hindenburg Research.
Hindenburg is famous for betting against companies with their short reports. They famously erased $100B+ in Adani Group’s market value — and exposed EV startup Nikola’s fraud, which led to its CEO’s criminal prosecution.
Now they’re back with a 17K+ word report attacking fintech giant Block (NYSE:SQ) — formerly Square — sending down 15% yesterday.
It’s a story of high-stakes growth and fraud — except it reads like an encyclopedia.
But don’t worry. We got the highlights for you:
- Block “wildly overstated its genuine user counts and has understated its customer acquisition costs.”
- The company embraced serving criminals, making it easy to mass-create accounts for fraud and scams.
- Former employees said the platform was filled with scam accounts and fake users.
- Loose compliance standards made it easy to facilitate unemployment and COVID payment fraud.
On Block’s fundamentals: Hindenburg expects 65-75% downside to — saying Block is overvalued, faces competitive threats from Zelle, PayPal and Apple, and insiders have already cashed out billions in stock near its peak.
Note: Hindenburg stands to benefit from going down — and not all of their reports have been successful.
