What happened
Shares of Block (SQ +1.79%) stumbled to the finish line this week, slipping by nearly 2% on Friday in contrast to the 0.6% gain of the S&P 500 index. Continued fallout from a scathing short-seller's report and general concerns about the health of the finance sector kept investors wary of the stock.
So what
At least Block's Friday was better than its awful Thursday, the day the report was published; that morning, the fintech's share price took a massive 20% blow before recovering somewhat.
Short-seller reports are, by their nature, highly critical, but this one really put the screws to Block's business. Much of Hindenburg Research's allegations had to do with the company's highly popular Cash App, which Hindenburg claims is a conduit for illegal activity -- implying that Block is either negligent or outright abetting fraud.
Sensibly enough, Block publicly responded in a press release to Hindenburg's various accusations later on Thursday. Characterizing the findings as "inaccurate and misleading," Block said that they are crafted to push its share price down in order for the short seller to profit.
The fintech added, "We are a highly regulated public company with regular disclosures and are confident in our products, reporting, compliance programs, and controls."
"We will not be distracted by typical short seller tactics," it continued.
NYSE: SQ
Key Data Points
Now what
While a damning short-seller report never comes at a good time for a target company, the timing of this one is particularly inopportune. It comes on the heels of the latest scary event in the banking sector, the big sell-off in Deutsche Bank stock following the German lender's sharp rise in the cost of credit default swaps.
