Short seller Hindenburg Research has hit another billionaire’s fortune with a report.
Jack Dorsey, the co-founder of payments company Block and Twitter, saw his net worth tumble by $526 million, or 11%, to $4.4 billion after the US-based research firm led by Nathan Anderson accused Block of misleading investors in a March 23 report, according to Bloomberg.
Dorsey isn’t on the list of the world’s 500 richest persons on the Bloomberg Billionaires Index currently. He was previously featured at number 456 with a net worth of $5.41 billion on March 22, per Insider’s scan of the Index on Wednesday.
San Francisco-based Block is the parent company of Square, a payments platform. It also has other businesses including Cash App, a funds transfer app, and buy-now-pay-later service Afterpay.
The decline in Block’s share price hit Dorsey’s net worth because most of his wealth is derived from his $3 billion stake in the payments company where he is now “block head” and chairman, per Bloomberg. Dorsey also still holds a $388 million stake in Twitter, which Elon Musk took private in October 2022.
The US short seller alleges Block — formerly known as Square — misled investors “with inflated metrics” and facilitated fraud.
“$SQ has embraced one very underbanked segment: criminals. When users were caught engaging in fraud, $SQ would blacklist the account but not ban the user,” Hindenburg Research tweeted on Thursday, referring to Block by its listing symbol on the New York Stock Exchange.
The stock debuted on the New York Stock Exchange in November 2015.
—Hindenburg Research (@HindenburgRes) March 23, 2023
Block’s share price tumbled as much as 22% on Hindenburg’s report before closing 15% lower at $61.88 apiece on Thursday. They edged down 0.5% in after hours-trade.
Block did not specifically address Insider’s request for comment about its share price decline that hit Dorsey’s fortune but referred to its public statement about Hindenburg’s report.
Block said in the March 23 statement it intends to work with the Securities and Exchange Commission and explore legal action against Hindenburg for the “factually inaccurate and misleading report.” It said Hindenburg’s attacks are designed “solely to allow short sellers to profit from a declined stock price.”
“We have reviewed the full report in the context of our own data and believe it’s designed to deceive and confuse investors,” Block added. “We are a highly regulated public company with regular disclosures, and are confident in our products, reporting, compliance programs, and controls.”
Hindenburg did not immediately respond to Insider’s request for comment sent outside regular business hours. It first teased its report on Block in a tweet on Wednesday, saying “New report soon — another big one.” No further details were shared at the time.
It’s not the first time Hindenburg Research has moved markets. The research firm shocked the markets when it alleged in a scathing January 24 report that the Adani Group “engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.”
The report hit investor sentiment and sent Adani-related stocks into a tailspin, losing over $150 billion in about five weeks, according to Bloomberg. This also sent founder Gautam Adani’s wealth plunging with his net worth halved to about $60 billion so far this year, per Bloomberg Billionaires Index.
In 2020, Hindenberg accused electric truck maker Nikola of fraud, which also sent its share price slumping.