Hindenburg report: Dorsey Poorer by $526m in Stock Rout :- As short-seller Hindenburg Research showed that Jack Dorsey’s digital payment business Block enables fraud against consumers and the government, the former co-founder and CEO of Twitter lost $526 million. Bloomberg Billionaires Index estimates that Dorsey is now worth $4.4 billion following his greatest single-day drop.
Block’s stock also plummeted on Thursday, falling as much as 22% before completing the day down 15%. With a goal to enlighten the “unbanked” and the “underbanked,” Block, originally known as Square, asserts to have created a “frictionless” and “magical” financial technology.
In its analysis, Hindenburg Research said that it had taken its most recent short position on Block. “Our two-year research has determined that Block has systematically taken advantage of the demographics it claims to be serving,” the firm wrote.
We also think Jack Dorsey has amassed a personal wealth of $5 billion while purporting to care profoundly about the demographics he is exploiting, the statement continued.
As a result of allegations that the company inflated its user count and customer acquisition costs, shares of Jack Dorsey’s payments company Block fell sharply on Thursday.
According to a research by short-seller Hindenburg Research, former Block employees believed that between 40 and 75 percent of the accounts they assessed were fraudulent, phoney, or extra accounts connected to a single person.
The charges were unconfirmed by Reuters, and Block did not immediately respond to a request for comment.
The same short-seller responsible for the recent $100 billion market collapse of India’s Adani Group is Hindenburg.
It also reported its short position in Block on Thursday.
The decision is perceived as a threat to Dorsey, who co-founded Twitter before Block, making him one of the most recognizable figures in Silicon Valley and a billionaire.
With a stake of about 8%, Dorsey is the company’s top stakeholder and co-founded Block in 2009 with the intention of upending the credit card business.
The report is released at a time when concerns about the robustness of consumer spending in the face of persistently rising inflation and prospects of an economic slowdown have clouded the picture for the payments industry.
Around lunchtime on Thursday, shares of Block were down more than 10%.
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