The Hindenburg report lowers Jack Dorsey’s Block Australian shares

Shares of Block Inc, which is run by Twitter co-founder Jack Dorsey and is traded in Australia, fell as much as 20% on Friday after Hindenburg Research said the payments company lied about how many users it had and how much it cost to get new customers.

Block said that the report was “not true and misleading in terms of facts”. He added that it was looking into taking legal action against the short-seller.

The benchmark ASX 200 Index in Australia fell the most. It is because shares of the company, which is based in San Francisco but also has a secondary listing there. At A$86.30, they were at their lowest point since November 2022. They then slowly went up to $88.31.

The Securities and Investment Commission, which keeps an eye on businesses in Australia, didn’t want to say anything. A source who wasn’t allowed to talk to the media said that the matter was up to the US government. Block’s main listing was in the US, so the Australian Stock Exchange didn’t say anything else.

Thursday, Block’s US shares fell 15%.

Hindenburg’s report caused India’s Adani Group‘s stock market to drop by more than $100 billion earlier this year. It said that former Block employees thought that 40% to 75% of the accounts they looked at were fake, involved in fraud, or were just extra accounts for the same person.

The move is seen as a challenge to Jack Dorsey, who co-founded Block with the goal of shaking up the credit card industry in his San Francisco flat in 2009. He owns about 8% of the company, making him the largest shareholder.

Since the US banking crisis, investors have been in the mindset of “sell first, ask questions later”. “This seems to be a well-timed attack by Hindenburg that puts Block on the chopping block”, said Matt Simpson. He is a senior market analyst at City Index.

The current banking crisis has messed up the market sentiment a lot:

In its report, the US short-seller said that Block’s $29 billion purchase of the Australian buy-now-pay-later company. It was when Afterpay was made in a way that got around responsible lending rules in its home country.

Glenn Yin, head of research and analysis at AETOS Capital Group, said that regulators and investors will be paying close attention to Hindenburg’s attack on Block. It is because the current banking crisis has messed up the market sentiment a lot.

Yin also said that it will take some time for the markets to process the claims made during the short-two-year seller’s investigation.

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