An Australian hedge fund manager says there are signs all is not well at Jack Dorsey’s Block as it faces an attack from short-seller Hindenburg.
An Australian hedge fund identified eight red flags at Block, the parent of Afterpay and the subject of an explosive attack by short-seller Hindenburg, which it argued should force investors to reconsider their bullish opinion on the stock.
Block shares moderated their 18 per cent decline on the ASX during trading in New York on Friday when they fell 1.9 per cent. Leading analysts also moved to justify theirLisa Ellis, an analyst from MoffettNathanson, said the Hindenburg report had highlighted a few issues but “the scale of the problems are overstated”.
But Brett Horn, a senior equity analyst for Morningstar Research, said: “The fact that rappers reference using Cash App for fraud in their lyrics is not compelling evidence of widespread issues.” “It’s not clear to us how widespread this potential issue of fraudulent accounts might be, which, we think, is a key concern [and] question for investors right now.”
While this issue is “well appreciated among investors”, Morgan Stanley’s Mr Faucette said most agree that “these fees are likely unsustainable in the very long-term”.
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