Payments firm Block's Australian shares slump after Hindenburg report


FILE PHOTO: A board displaying stock prices is seen at the Australian Securities Exchange (ASX) in Sydney, Australia, Feb. 9, 2018. REUTERS/David Gray/File Photo

AUSTRALIA-listed shares of Block Inc, led by Twitter co-founder Jack Dorsey, plunged as much as 20% on Friday after Hindenburg Research alleged the payments firm overstated its user numbers and understated its customer acquisition costs.

Block said the report was "factually inaccurate and misleading" and that it was exploring legal action against the short-seller.

Shares of the San Francisco-headquartered company, which has a secondary listing in Australia, led losses in the country's benchmark ASX 200 Index. They hit their lowest since November 2022 at A$86.30 before edging up slightly to $88.31.

Australia's corporate watchdog, the Securities and Investment Commission, declined to comment. A source not authorised to speak with media said the matter was for U.S. regulators. The Australian Stock Exchange noted Block's primary listing was in the U.S. and declined to comment further.

Block's U.S. shares fell 15% on Thursday.

Hinderburg's report, which was behind a market rout of more than $100 billion in India's Adani Group earlier this year, said it found former Block employees estimated 40% to 75% of accounts they reviewed were fake, involved in fraud, or were additional accounts tied to a single individual.

The move is seen as a challenge to Dorsey, who co-founded Block in 2009 in his San Francisco apartment with a goal to shake up the credit card industry. He is the company's largest shareholder with a stake of around 8%.

Investors have been in a "sell first, ask questions later" mode since the U.S. banking crisis "so this seems to be a well-timed attack by Hindenburg which puts Block on the chopping block," said Matt Simpson, senior market analyst at City Index.

Block's $29 billion buyout of the Australian buy-now-pay-later firm Afterpay "was designed in a way that avoided responsible lending rules in its native Australia," the U.S. short-seller said in its report.

"Hindenburg's attack on Block will be very closely watched by both regulators and investors, given the current banking turmoil has severely disrupted market sentiment," said Glenn Yin, head of research and analysis, AETOS Capital Group

Markets will take time to digest the claims made under the short-seller's two-year investigation, Yin added. - Reuters

Follow us on our official WhatsApp channel for breaking news alerts and key updates!

ASX , Block , Hindenburg , Afterpay , e-commerce , Jack Dorsey

   

Next In Business News

Leon Fuat optimistic on long-term prospects
Maybank to launch white papers on net zero pathway for oil palm, power sectors
Favelle Favco hopeful for increased orders amid global recovery
Tex Cycle reports strong 1Q profit
Ringgit firmer against US dollar at the close
Fajarbaru gets RM15.71mil contract extension from Australian Department of Defence
Berjaya Land's 3Q net profit up sevenfold
Ageson gets RM54.33mil apartment job
Southern Cable 1Q24 net profit more than doubles to RM14.1mil
Kenanga Investment Bank to monitor market uncertainties

Others Also Read