JOIN USHindenburg shorts Jack Dorsey's payments firm Block
Hindenburg Research said on Thursday it held short positions in Block Inc, alleging that the Jack Dorsey-led payments firm overstated its user counts and understated its customer acquisition costs.
"Our 2-year investigation has concluded that Block has systematically taken advantage of the demographics it claims to be helping," the short seller said in a note published on its website.
Shares of Block fell 18 per cent in premarket trading after the report.
Block did not immediately respond to a Reuters request for comment.
The US short-seller, behind a market rout of over $100 billion in India's Adani Group, said in its latest report that former Block employees estimated that 40 per cent-75 per cent of accounts they reviewed were fake, involved in fraud, or were additional accounts tied to a single individual.
Reuters could not verify the claims raised by Hindenburg against Block.
About 5.2 per cent of Block's free float shares were in short position as of March 22, according to Ortex data.
Founded in 2017 by Nathan Anderson, Hindenburg Research is a forensic financial research firm that analyses equity, credit and derivatives. It has a track-record of finding corporate wrongdoings and placing bets against the companies.