Cathie Wood Snaps Up Shares of Block Inc. Amid Hindenburg-Fueled Rout
Ark Investments founder and CEO Cathie Wood snapped up a huge chunk of Block Inc. (NYSE: SQ) shares while the stock price plunged nearly 15% dropping to $61.88 levels on Thursday, March 23, amid the short seller report by Hindenburg Research.
According to Ark’s daily trading data, the firm purchased more than 338,000 shares of Block on Thursday. This purchase came through three different exchange-traded funds backed by Ark Investment Management LLC. ARK Innovation ETF, Ark Fintech Innovation ETF, and ARK Next Generation Internet ETF made the purchases yesterday.
Jack Dorsey’s Block Inc. facilitates crypto and digital payments and holds more than $220 million worth of Bitcoins in its reserves by the end of 2022. Previously, Square, the company has focused on new-age digital payments.
Ark Invest is among the top ten holders of Block Inc. shares. Cathie Wood is famous for making bold bets in this newly emerging space. Ark Invest has continued to purchase Coinbase (NASDAQ: COIN) stock even during the heavy correction over the last year.
Why Hindenburg Short Block Inc?
In its short seller report, Hindenburg Research reported that Block Inc. facilitated scammers while taking advantage of government schemes during the pandemic. Hindenburg has accused Block of conducting fraud to the tune of $1 billion. In the report published on its website, Hindenburg noted:
“Our 2-year investigation has concluded that Block has systematically taken advantage of the demographics it claims to be helping. The magic behind Block’s business has not been disruptive innovation, but rather the company’s willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics”.
In a statement later, Block Inc said that they will work with the U.S. Securities and Exchange Commission (SEC) and shall consider legal action against Hindenburg for this misleading report on its Cash App business. It said that the Hindenburg report on Cash App was “factually inaccurate and misleading”. It added that Hindenburg is trying to “deceive and confuse investors”.
The digital payments company further added that they are confident regarding their products, compliance program, reporting, and controls.
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