SQ: Block Fights Back After Short-Seller Report

Shares of the Jack Dorsey-led payments group fell about 15% after Hindenburg accused it of fraud.

• Shares of Block, formerly known as Square, got hammered on Thursday, after the payments firm was slapped with a report from short-seller Hindenburg Research. In the papers, Hindenburg says that its two-year investigation found the company has artificially inflated user numbers.
• Hindenburg, which disclosed it holds a short position in Block, also mentioned that Jack Dorsey’s firm has facilitated fraudulent transactions. Block’s core business is to handle payments through its widely popular Cash App, which competes with rivals such as PayPal.
• In response to the accusations, Block said it’s exploring legal action against the short-seller. It also labeled the report as “factually inaccurate” and “misleading.” Block’s stock fell more than 20% during regular market hours on Thursday and closed lower by 14.8%.