Block (NYSE:SQ) stock is falling 3% in early trading after plunging 14.8% yesterday, and the name is trending on Yahoo Finance. Today Block issued a five-sentence statement responding to accusations against it made by short-seller Hindenburg Research.
Block categorically denied Hindenburg’s charges in the statement and threatened to sue the short seller.
More About Block’s Statement
In its five-sentence statement, Block wrote that it plans to “work with the SEC” while considering taking “legal action against Hindenburg Research for the factually inaccurate and misleading report.”
Accusing Hindenburg of being motivated solely by a desire to reduce SQ stock, the company contended that the research firm’s report was “designed to deceive and confuse investors.”
Wall Street’s Reactions to Hindenburg’s Report
Hindenburg accused Block of systematically ignoring fraud and theft committed using its Cash App platform. The firm also claimed that Block allowed its users to launch “fraudulent accounts” and had implemented “predatory loans and fees.”
Calling the accusations “plain wrong,” investment bank Truist (NYSE:TFC) wrote that it is “highly unlikely that one of the most sophisticated FinTechs in the US is running rampant with systemic fraud.”
Oppenheimer, another investment bank that covers SQ stock, also used the term “highly unlikely” to describe its view of Hindenburg’s accusations. However, Oppenheimer did state that regulators could examine payment platforms more closely in the wake of Hindenbiurg’s accusations.
Issuing a more negative statement, Citi (NYSE:C) wrote that Block should have provided a more detailed refutation of Hindenburg’s charges. “‘Exploring legal action’ will likely not be enough to settle investors’ concerns,” Citi warned.
Background on Block and SQ Stock
One of the co-founders of Block and its current CEO is Jack Dorsey, a co-founder of Twitter who served as the latter platform’s CEO for many years.
SQ stock has tumbled 16% in the five trading days that ended yesterday, and it’s down 53% in the last 12 months.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
