Block tumbles 19% after Hindenburg Research report 📉

2:58 PM 23 March 2023

The Hindenburg Research investment fund has published a special report, announced since yesterday, taking a negative view of fintech business Block (SQ.US), run by Jack Dorsey (co-founder of Twitter and Bitcoin fan). The stock is losing today more than 19%. Previously, Hindenburg took a swipe at India's Adani Group, leading to its shares crashing in Q4 2022. At the time, he pointed to creative accounting and a variety of irregularities that helped Adani make a fortune in the commodities and raw materials markets. What revelations did Hindenburg Research analysts share with the market this time?

  • The Hindenburg report highlighted that Block's business does not offer any financial innovation against its competitors although it claims to. The analysts pointed out that the company avoids so-called intercharge payments contrary to Congressional law by diverting payments through small banks, to the disadvantage of customers (higher fees);
  • According to the report, the announced 'buy now, pay later' afterpay service does not add any value and does not look favourable to users due to very high late payment costs. In 2022, the year of Afterpay's acquisition, it lost USD 357 million, up from USD 184 million in 2021;
  • According to the analysis, Block allegedly misled investors on key business metrics to drive share growth and profits from selling insiders at inflated prices during the pandemic share price rally (approximately US$1bn in shares sold);
  • Hindenburgh Research pointed to threats from competitors like Alphabet, Apple, Paypal or Venmo and Zelle, which are rapidly expanding payments via phones (Apple increased Apple Pay activations from 20% in 2017 to over 70% in 2022 and leads in digital wallet market share).
  • Analysts says tha Block's business is valued like a highly profitable company and is overvalued compared to other fintech companies (P/B ratio around 13 a.e.). The fund sees around 50-75% potential for the company's shares to fall.

The stock has opened today at levels last seen in March 2020 and the 2022 crypto lows. Source: xStation5

Start investing today or test a free demo

Open real account TRY DEMO Download mobile app Download mobile app
Xtb logo

Join over 1 000 000 XTB Group Clients from around the world

The financial instruments we offer, especially CFDs, can be highly risky. Fractional Shares (FS) is an acquired from XTB fiduciary right to fractional parts of stocks and ETFs. FS are not a separate financial instrument. The limited corporate rights are associated with FS.
This page was not created for investors residing in Brazil. This brokerage is not authorized by the Comissão de Valores Mobiliários (CVM) or the Brazilian Central Bank (BCB). The content of this page should not be characterized as an investment offer in Brazil or for investors residing in that country.
Losses can exceed deposits

We use cookies

By clicking “Accept All”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

This group contains cookies that are necessary for our websites to work. They take part in functionalities like language preferences, traffic distribution or keeping user session. They cannot be disabled.

Cookie name
userBranchSymbol cc 2 March 2024
test_cookie cc 25 January 2024
adobe_unique_id cc 1 March 2025
__hssc cc 8 September 2022
SESSID cc 2 March 2024
__cf_bm cc 8 September 2022
intercom-id-iojaybix cc 26 November 2024
intercom-session-iojaybix cc 8 March 2024

We use tools that let us analyze the usage of our page. Such data lets us improve the user experience of our web service.

Cookie name
_gid cc 9 September 2022
_gat_UA-98728395-1 cc 8 September 2022
_gat_UA-121192761-1 cc 8 September 2022
_gcl_au cc 30 May 2024
_ga_CBPL72L2EC cc 1 March 2026
_ga cc 1 March 2026
__hstc cc 7 March 2023

This group of cookies is used to show you ads of topics that you are interested in. It also lets us monitor our marketing activities, it helps to measure the performance of our ads.

Cookie name
MUID cc 26 March 2025
_omappvp cc 11 February 2035
_omappvs cc 1 March 2024
_uetsid cc 2 March 2024
_uetvid cc 26 March 2025
_fbp cc 30 May 2024
fr cc 7 December 2022
_ttp cc 26 March 2025
_tt_enable_cookie cc 26 March 2025
_ttp cc 26 March 2025
hubspotutk cc 7 March 2023

Cookies from this group store your preferences you gave while using the site, so that they will already be here when you visit the page after some time.

Cookie name

This page uses cookies. Cookies are files stored in your browser and are used by most websites to help personalise your web experience. For more information see our Privacy Policy You can manage cookies by clicking "Settings". If you agree to our use of cookies, click "Accept all".

Change region and language
Country of residence