Block Inc, a payments company owned by Twitter co-founder Jack Dorsey, has experienced a significant decline in value following the release of a report by Hindenburg report . The report alleged that the company ignored widespread fraud, and as a result, Dorsey's personal fortune has been negatively impacted. On Thursday, his net worth dropped by $526 million, marking his worst single-day decline since May. According to the Bloomberg Billionaires Index, Dorsey's current net worth stands at $4.4 billion after an 11% drop in value.
The Hindenburg report claimed that Block had inflated user metrics and predicted a 65% to 75% downside risk "on a purely fundamental basis." However, Block has denied the allegations and plans to pursue legal action against the short-seller. The company's stock fell as much as 22% on Thursday before eventually closing down 15%.
Dorsey, whose personal fortune is largely invested in Block, holds an estimated stake in the firm worth $3 billion, according to the Bloomberg wealth index. His position in Elon Musk's social media company is valued at $388 million.
Block Inc is reportedly looking in to taking legal actions against Hindenburg, which implies they can disprove some of their claims. Keep in mind that just threatening legal action requires nothing and may just be an attempt to stop some of the damage.
Hindenburg Research is known for its controversial reports...
Which often result in the decline of targeted companies' stock prices. Earlier this year, the firm released an investigation into 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., which led to a significant drop in its stock price and a fraud conviction against its founder Trevor Milton in October.
While Dorsey is unlikely to face a similar downfall, the temporary pain caused by the recent decline in value is undoubtedly being felt.
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