Hindenburg Comments On Block’s Response, Says Number Of Cash App Users Do Not Match ‘Transacting Actives’ Number

On Friday, U.S. short-seller Hindenburg Research said that Block, Inc’s (NYSE: SQ) response revealed for the first time that the company has internal estimates of the number of users on the Cash App platform that do not match the number of “transacting actives” disclosed to investors as its key user metric.

Yesterday, Block disclosed that Cash App users comprise 39 million unique Social Security Numbers (SSNs) and 44 million verified accounts, sharply differing from the misleading “transacting actives” metric Block has previously reported to investors. For example, in September 2022, Block’s CFO Amrita Ahuja touted the company’s 80 million annual transacting activities to justify its acquisition of Afterpay.

Block’s newly reported internal estimates also show that its previously reported 51 million monthly transacting actives as of December 2022 represented a 16%-31% inflation of its actual estimated internal user counts.

Block’s latest disclosure reflects that the company has artificially lowered customer acquisition costs by inflating the number of users on the platform.

Hindenburg believes Block should continue to report verified user counts and individual SSNs to investors in the future. Last week, it alleged Block of facilitating fraud through a lack of compliance controls on its flagship product, CashApp.

After a two-year investigation, Hindenburg claims that Block has overstated its genuine use counts and has understated its customer acquisition costs. Hindenburg says former employees estimate that 40%-75% of accounts they reviewed were “fake, fraudulent, or multiple accounts connected to the same individual.”

Due to these fraud allegations, valuation multiples, and questions of profitability, Hindenburg states that it sees a downside between 65%-75% in Block shares.

Price Action: SQ shares traded higher by 2.22% at $70.01 on the last check Friday.

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This article Hindenburg Comments On Block’s Response, Says Number Of Cash App Users Do Not Match ‘Transacting Actives’ Number originally appeared on


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