The co-founder of Block Inc., Jack Dorsey, saw his net worth drop by $526 million in a single day following allegations of widespread fraud made by Hindenburg Research. The report claimed that the payments company had inflated user metrics and suggested that the stock could fall by as much as 75% on a fundamental basis. Block Inc. denied the allegations and has threatened legal action against the short-seller.
Block Inc. saw its stock fall by as much as 22% before closing down 15% on Thursday. The company has denied any wrongdoing, and Dorsey, who also co-founded Twitter, has most of his personal fortune tied up in Block Inc. According to the Bloomberg wealth index, Dorsey’s stake in the firm is valued at $3 billion.
This is not the first time that Hindenburg Research has targeted billionaires, causing their fortunes to decline. The firm previously investigated Gautam Adani and his empire, causing his companies’ stocks to plummet and erasing tens of billions of dollars from his net worth. Similarly, in September 2020, Hindenburg targeted electric carmaker Nikola Corp., resulting in a fraud conviction against its founder Trevor Milton.
The allegations made by Hindenburg Research have raised concerns about the credibility of Block Inc. and the potential impact on its investors. The company’s response and any legal action it takes against Hindenburg could determine the future direction of the company and the fortunes of its co-founder, Jack Dorsey.