Square-parent Block, Inc. (SQ), a digital payment company, responded to a short-seller on Thursday who claimed that the company inflated Cash App users metrics and encouraged fraud. SQ stock has continued to recover from the steep drop it suffered after the initial report.
Hindenburg claims that Cash App does not have the 51 million monthly active users Square claimed in its financial results. Square released its own report Thursday, which provided detailed data about Cash App users.
Square responded by saying: "Cash App was built to support users who want to maintain multiple account. Customers can, for example, maintain separate accounts for their business and personal needs or multiple personal accounts.
Trevor Williams, an analyst at Jefferies, wrote in a client note that "the response to us strongly refuted most of the allegations." "(Square) said that 44 million of the 51 millions monthly actives have verified identities. Of the 44 million monthly actives, 39 have unique SSNs. This dispels the notion that the user base was awash in dupes.
SQ shares closed at 68.49 today, up 3%. The stock price fell by 14.8% on the 23rd of March, when Hindenburg Research published its report.
Square stock also dropped to a intraday low of 56.50 on 23 March. SQ stock is now trading about 6% lower than it was prior to the Hindenburg Report.
Square Stock aims to create a digital payment ecosystem that is two-sided in its core business. The products would be designed both for merchant sellers and consumers buyers. Square Cash App allows users to manage their money, purchase stocks, cryptocurrency and more.
The company responded by saying: "While many people use Cash App as a tool to help them improve their finances, some individuals still seek to commit fraud and other illegal activities." Unfortunately, this is the case in the entire financial services industry. "Our risk and compliance programs and teams are designed to mitigate these incidents and their impact."
SQ Stock has no valid entry as of 23 March. Square stock must also form a base in order to be actionable.
Reinhardt Krause is on Twitter @URL. Follow him for the latest updates on 5G wireless technology, artificial intelligence and cybersecurity.
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Investor's Business Daily published the article Square Discloses User Data of Cash App, Firing At Short Seller Hindenburg.