Hindenburg claims Block overstated Cash App users, understated acquisition costs
  • March 31, 2023
  • Thomas Waner
  • 0

Hindenburg Research, a US-based short seller, has claimed that Block, the payments company led by Twitter co-founder Jack Dorsey, inflated Cash App user counts for years, confirming Hindenburg’s earlier allegations. Block’s response, which stated that more than 44 million of its over 51 million monthly active users on Cash App were verified through its identity program as of December 31, did not impress Hindenburg. According to a note published on its website, the recently disclosed internal estimates from Block also confirmed that the previously reported 51 million monthly transacting actives as of December 2022 were inflated by 16%-31% of its actual estimated internal user counts.

Despite this, Block has yet to respond to a request for comment from Reuters. The allegations come in the wake of Hindenburg’s report last week, which stated that former Block employees had estimated that between 40% and 75% of the accounts they reviewed were fake, fraudulent, or were additional accounts linked to a single person. Hindenburg, which took a short position in Block, accused the payments company of overstating its Cash App user numbers while understating its customer acquisition costs.

Short sellers typically borrow securities and attempt to purchase them back at a lower price. Hindenburg’s claims come at a time when investors are already wary of inflated valuations in the tech industry. While this news is potentially concerning for Block investors, it is important to note that these allegations are not yet substantiated, and it remains to be seen what effect they will have on the company’s stock price.

Thomas Waner

A writer interested in artificial intelligence fields with good experience in programming. He is currently working for us as a writer, manager, and reviewer, with a strong CV.
from India. You can contact him via e-mail: [email protected]

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