Block Stock (NYSE:SQ)
Block (NYSE:SQ) stock continued to climb higher during trading on Friday, increasing by 2.3% by lunchtime. This comes as investors evaluate the fintech company’s second response to Hindenberg Research’s short report released last week.
The answer was called a “strong response” by BofA Securities analyst Jason Kupferberg, who has a Buy recommendation on Block stock. The short report’s accusation that 40%-75% of Cash App accounts are fake/fraudulent/duplicative is “not plausible.”
In a letter to clients, he said, “We feel that today’s reaction by SQ should be beneficial for shares since it offers fact-based information to reject the substance of the short report.”
“We do feel these revelations put the record straight that the degree of fraudulent activity on the platform is not as pervasive as the short-seller report implied, at least as of now,” said Citi analyst Peter Christiansen, who also has a Buy recommendation. s
Analyst Dan Dolev from Mizuho Securities, who also recommends buying the stock, stated that Block’s second rebuttal is a positive development. However, he noted that there is still room for improvement “omits to address a primary issue: the total amount of gross profit (GP) generated by illegal activity. Even bad actors have Social Security numbers.”
On the quarterly earnings call for Block, management indicated they would discuss Cash App’s “stated priority of trust” further. On May 4, analysts anticipate the firm will release its earnings report for the first quarter.
In response to the reply provided by Block, Hindenburg did not back down from the claims that it made.
Block stock has grown 13% in the previous week and 25% in the past six months.
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