What happened

Shares of Block (SQ -2.28%) were trending higher on Wednesday, up 5.1% as of 12:30 p.m. ET. It had been up as much as 5.4% during morning trading. The stock was trading at about $67 per share, up about 6.6% year to date.

The major indexes were all up on Wednesday as the S&P 500 had gained 44 points (1.1%), the Dow Jones Industrial Average was up 236 points (0.7%), and the Nasdaq Composite had climbed 169 points (1.4%).

So what

It has been a wild few days for the fintech following the release of a less-than-complimentary report by Hindenburg Research that alleges, among other things, inflated metrics about the number of Cash App active users, deteriorating lending from its buy now, pay later Afterpay service, and fraudulent and/or criminal accounts on Cash App.

The stock sank dramatically on the report from the short-seller last week, but it has climbed back up this week as several analysts have downplayed some of the charges.

On Wednesday, analysts at D.A. Davidson said they were "increasingly confident" in Block after the Hindenburg report, according to The Fly. Last week, D.A. Davidson analyst Chris Brendler said some of the allegations were already known or innocuous, according to reports.

On Tuesday, Harshita Rawat, an analyst at Bernstein, called some of the charges overstated and exaggerated, and maintained an outperform rating and $90 price target on Block. 

However, Mizuho lowered its price target to $85 from $93 due to rising risks from the narrative about the uncertain number of users. Morgan Stanley analyst James Faucette said the allegations in the Hindenburg report were well understood, according to reports, but he cited regulatory uncertainty from stresses in the broader banking system as the reason for lowering the price target from $72 to $70.

Now what

One thing the report got right is the stock is overvalued, with a forward price-to-earnings ratio of about 44. For a company that has not been consistently profitable, that just seems too high.

While the Cash App has been the company's cash cow, and will be into the future, Block has been sidetracked by its investments in cryptocurrency and struggling ventures like Tidal and Afterpay.

Given its high valuation, along with macroeconomic and regulatory concerns for banks and fintechs, it's best to proceed cautiously with this stock.