> The report is extremely long, but having gone through the bullet points, the case seems quite overstated.
I've gone through it fully, not just the tl;dr. It's not overblown. They're not saying Block is doing anything illegal, only Block is valued much too highly.
The bulk of it is Block skirting regulatory requirements to acquire more users easily, and those users doing illegal things with their Cash app accounts. And this is already crashing down as they're now, for example, required to collect full social security numbers for the Cash app debit cards (previously only last 4 digits).
Considering the Cash app is Block's largest consumer user base, and a large reason for Block's high valuation they have a good case for why Block should be valued closer to PayPal than as a disruptive growth stage company.
Well they are saying that Block is enabling crime and skirting regulations. Considering the overall regulatory climate change in the wake of SVB there is going to be impact on what they still can dare to do in the future. Growth limit #1. Then they are pretending to be small and thus demand big fees. If that stops profitability will be hit big tome. Growth limit #2. And their user numbers seem to be inflated. Growth limit #3. They are serving criminal niche market and are facing in general markets well capitalized and strongly growing competitors. Growth limit #4.
Now what is a reasonable price earning ratio for such a business?
> I've gone through it fully, not just the tl;dr. It's not overblown. They're not saying Block is doing anything illegal, only Block is valued much too highly.
Hindenberg is accusing Block of committing fraud. That's an allegation of criminal activity.
Block may be overvalued. I probably wouldn't buy it, and have my own beef with how Block operates.
> Hindenberg is accusing Block of committing fraud.
I don't think so unless I missed a big accusation?
They're accusing Block of enabling fraud, and when Block can no longer enable fraud -- say due to higher regulatory oversight -- it'll lose much of its appeal and customer base, which has already dropped significantly post pandemic.
I've gone through it fully, not just the tl;dr. It's not overblown. They're not saying Block is doing anything illegal, only Block is valued much too highly.
The bulk of it is Block skirting regulatory requirements to acquire more users easily, and those users doing illegal things with their Cash app accounts. And this is already crashing down as they're now, for example, required to collect full social security numbers for the Cash app debit cards (previously only last 4 digits).
Considering the Cash app is Block's largest consumer user base, and a large reason for Block's high valuation they have a good case for why Block should be valued closer to PayPal than as a disruptive growth stage company.