To The Moon

On March 23, 2023, Hindenburg Research released a report that made several claims against $Block(SQ)$  Block (SQ), a digital payments specialist. The report alleges that Block is materially overvalued, and its Cash App is built on fraud. The report's primary claim is that Block's products facilitate crime rather than advance technological progress. Hindenburg Research also claims that Block has inflated user metrics and allowed insiders to cash out over $1 billion.

Block (SQ) issued a statement in response to Hindenburg's report, stating that the report was "factually inaccurate and misleading." Additionally, several analysts remained bullish on the stock, citing its solid financials and growth prospects.

To determine the validity of Hindenburg's claims, let us review some of the key allegations:

Block's Cash App is built on fraud.

Hindenburg Research claims that Block's Cash App has been built on fraud and has facilitated payments for criminal activity, including sex trafficking and drug dealing. The report alleges that the company has allowed its users to defraud the US government's COVID-19 relief programs. Hindenburg also claims that former employees estimate that between 40%-75% of accounts they reviewed were either fake, linked to fraud, or multiple accounts belonging to a single person.

These are significant allegations, and if true, could have serious legal and financial implications for the company. However, Block has denied the claims, stating that they are "categorically false and misleading." The company has also stated that they have robust compliance measures in place to prevent illegal activity on their platform.

It is important to note that the burden of proof lies with the accuser, and as of yet, Hindenburg has not provided any concrete evidence to support its claims. Therefore, it is difficult to determine the veracity of the allegations at this time.

Block has inflated user metrics.

Hindenburg Research claims that Block has inflated its user metrics to give the impression of growth and momentum. The report alleges that the company has used questionable tactics, such as creating fake accounts, to inflate its user numbers. Hindenburg also claims that the company's user retention rate is much lower than what has been reported.

Again, these are significant allegations that, if true, could damage the company's reputation and affect its financials. However, Block has denied these claims and stated that they are "unfounded and baseless." The company has also stated that they use rigorous methods to measure user engagement and retention.

As with the previous claim, Hindenburg has not provided any concrete evidence to support its allegations. Therefore, it is difficult to determine the validity of the claims.

Insiders have cashed out over $1 billion.

Hindenburg Research claims that insiders at Block have cashed out over $1 billion, taking advantage of inflated valuations and questionable financial practices. The report alleges that the company's executives have sold a significant portion of their shares, indicating that they do not believe in the long-term prospects of the company.

Again, these are significant allegations that, if true, could damage the company's reputation and affect its financials. However, Block has denied these claims, stating that they are "misleading and sensationalist." The company has also stated that insider selling is a routine part of the market and does not necessarily indicate a lack of faith in the company's prospects.

As with the previous claims, Hindenburg has not provided any concrete evidence to support its allegations. Therefore, it is difficult to determine the validity of the claims.he validity of the claims.

Conclusion on the Report

In conclusion, while it is impossible to say for certain whether Hindenburg Research's report on Block (SQ) holds any water, the report makes a number of serious allegations that should be investigated by regulatory authorities. It is important for investors to conduct their own due diligence and make informed decisions based on all available information. If the allegations in the report are found to be true, it could have significant implications for Block's financial performance and its reputation in the marketplace.

My Take on SQ stock

The report Hindenburg Research's report on Block (SQ) was released on 23 Mar 2023, the stock has crashed to as much as 22% to 56.5 on the day itself and recovered a bit to close at 60.68. For the week, SQ is down 17.5% compared to S&P 500 $S&P 500(.SPX)$ which eked out 1.4%.

In my opinion, Hindenburg has probably already reached its aim of successfully short selling SQ as we see can see that the stock already dropped 6.21% on 22 March even before the report was published.

Although we can see that no hard evidence is produced by Hindenburg, the regulatory authorities may launch an official investigation and creates another flush. Before this happens, there may be a technical rebound if the stock goes deeply into the oversold region. Based on the day chart above, the stock closed at the relative strength index RSI (14) of 31.495, very near the oversold region (below 30). If the RSI goes below 20, speculators may want to go in for a quick buck and ride the volatility.

@TigerStars  @CaptainTiger  @MillionaireTiger  

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