CEO Jack Dorsey’s wealth eroded by $526 million on Thursday after short-seller Hindenburg Research published a bearish report on the company.
What Happened: Dorsey is worth $4.4 billion after taking an 11% hit on his net worth, reported Bloomberg, citing data from the “Billionaire’s Index” maintained by it.
The index estimated that Dorsey’s stake in Block is worth $3 billion, while his position in the Elon Musk-owned Twitter is $388 million.
On Thursday, Block shares fell by nearly 15% after Hindenburg said that Block was taking advantage of people it claims to be helping by disguising its “predatory” loans as a revolutionary technology.
Why It Matters: A previous disclosure by Hindenburg on India’s Adani Group led to billionaire Gautam Adani falling out of the 10 Wealthiest List.
The report, released in January, also led to the culling of a planned $2.5 billion share sale of Adani’s flagship company Adani Enterprises.
Block has hit back at Hindenburg calling the report from the short seller “misleading” and “factually inaccurate.”
The Dorsey-led company said it was “highly regulated” and made regular public disclosures as a public company.
Price Action: On Thursday, Block shares closed 14.8% lower at $61.89 in the regular session and declined another 0.6% in the after-hours trading, according to data from Benzinga Pro.
Jack Dorsey, the co-founder of payments company Block and Twitter, saw his net worth tumble by $526 million, or 11%, to $4.4 billion after the US-based research firm led by Nathan Anderson accused Block of misleading investors in a March 23 report, according to Bloomberg.
Dorsey isn’t on the list of the world’s 500 richest persons on the Bloomberg Billionaires Index currently. He was previously featured at number 456 with a net worth of $5.41 billion on March 22, per Insider’s scan of the Index on Wednesday.
San Francisco-based Block is the parent company of Square, a payments platform. It also has other businesses including Cash App, a funds transfer app, and buy-now-pay-later service Afterpay.
The decline in Block’s share price hit Dorsey’s net worth because most of his wealth is derived from his $3 billion stake in the payments company where he is now “block head” and chairman, per Bloomberg. Dorsey also still holds a $388 million stake in Twitter, which Elon Musk took private in October 2022.
The US short seller alleges Block — formerly known as Square — misled investors “with inflated metrics” and facilitated fraud.
“$SQ has embraced one very underbanked segment: criminals. When users were caught engaging in fraud, $SQ would blacklist the account but not ban the user,” Hindenburg Research tweeted on Thursday, referring to Block by its listing symbol on the New York Stock Exchange.