Square-parent Block (SQ) on Thursday fired back at short-seller Hindenburg Research amid charges the digital payment company inflates Cash App user metrics and facilitates fraud. SQ stock continued to claw its way back from the deep drop that came with the original report.
X
In its report, Hindenburg claimed Cash App doesn’t have 51 million active monthly users as Square has stated in financial results. Meanwhile, Square published its own report on Thursday providing detailed data on Cash App users.
In its response, Square said: “Cash App is built to support customers who may want to maintain multiple accounts. For example, customers can maintain a separate business and personal account or can also maintain multiple personal accounts (one for everyday personal use and one to set aside funds for budgeting).”
“To us, the response strongly refuted the most pointed allegations,” Jefferies analyst Trevor Williams said in a note to clients. “(Square said) of the 51 million monthly actives, 44 million have verified identities. And, of the 44 million, 39 million have unique SSNs (Social Security numbers), refuting that the user base is awash with dupes.”
SQ Stock Claws Back
SQ stock advanced 3% to close at 68.49 on the stock market today. Shares originally fell 14.8% to close at 61.88 on March 23, the day Hindenburg Research released its report.
Further, Square stock had dropped to a low of 56.50 in intraday trading on March 23. SQ stock now trades about 6% below where it was before the Hindenburg report came out.
In its core businesses, Square stock aims to build a two-sided digital payments ecosystem. Products would be designed for both merchant sellers and consumer buyers. Also, the Square Cash App helps individuals manage money, buy stocks and cryptocurrency, and more.
In its response, the company added: “While people use products like Cash App to improve their financial lives, there are individuals who nevertheless seek to perpetrate fraud and other illicit activity. This is unfortunately the case across the financial services industry. Our risk and compliance teams and programs are built around mitigating these instances and their impact.”
As of March 23, SQ stock has no valid entry point. In addition, Square stock needs to form a new base to be actionable.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
YOU MIGHT ALSO LIKE:
IBD Digital: Unlock IBD’s Premium Stock Lists, Tools And Analysis Today
Learn How To Time The Market With IBD’s ETF Market Strategy
IBD Live: A New Tool For Daily Stock Market Analysis
Want To Get Quick Profits And Avoid Big Losses? Try SwingTrader
Source: https://www.investors.com/news/technology/sq-stock-square-discloses-cash-app-user-data-firing-back-short-seller/?src=A00220&yptr=yahoo