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Block: Inflated user metrics and “frictionless” fraud facilitation

hindenburgresearch.com

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Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#51

Post by ctvo »

baryphonic wrote: post #28
propercoil wrote: post #2

[flagged]

The report is extremely long, but having gone through the bullet points, the case seems quite overstated. There are in fact millions of people who use Cash App, though it's probably less popular overall than Venmo. I know this because my wife and her friends will mention it and Venmo when talking about splitting bills. (Given the technical challenges Wells Fargo has had lately, I'm not sure who trusts Zelle.) A lot o…

> The report is extremely long, but having gone through the bullet points, the case seems quite overstated.

I've gone through it fully, not just the tl;dr. It's not overblown. They're not saying Block is doing anything illegal, only Block is valued much too highly.

The bulk of it is Block skirting regulatory requirements to acquire more users easily, and those users doing illegal things with their Cash app accounts. And this is already crashing down as they're now, for example, required to collect full social security numbers for the Cash app debit cards (previously only last 4 digits).

Considering the Cash app is Block's largest consumer user base, and a large reason for Block's high valuation they have a good case for why Block should be valued closer to PayPal than as a disruptive growth stage company.

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#52

Post by paganel »

numlocked wrote: post #23

"CEO Jack Dorsey has publicly touted how Cash App is mentioned in hundreds of hip hop songs as evidence of its mainstream appeal. A review of those songs show that the artists are not generally rapping about Cash App’s smooth user interface—many describe using it to scam, traffic drugs or even pay for murder." Hindenburg made a music video compiling the references that is...uh...worth watching: https://www.youtube.co…

On the one hand it's obvious that the Hindenburg people are right on this when they say that Block's app is used for criminal activities and money laundering. On the other hand that's what we get for trying to push cash itself more and more outside the boundaries of modern society. That video in a way made me root for the bad guys, a no-cash society where petty crime doesn't happen because the powers that be control it all is a not a society I personally want to be part of.

And then there is also the racial-related aspect of it all, not sure the Hindenburg analysts were aware of it. As in there is no white rapper in that video of theirs.

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#53

Post by [deleted] »

headsoup wrote: post #9
propercoil wrote: post #2

[flagged]

What? Do you know who Hindenburg are or are you just a shill account (or Bill Ackman fanboy)? Short sellers are essentially litmus tests. If you're all legit, they'll get wrecked, if you're doing dumb things, you're about to get found out.

[deleted]

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#54

Post by johngladtj »

likecarter wrote: post #44
chii wrote: post #42

Earlier quoted context omitted.

> It feels weird that they're using Cash App to indict the company as a whole. they profit off shorting. So it makes sense to target them if the company has _some_ issues with fraud, even if it's a small part of their business, as it hasn't been priced in yet before this news breaks and people are positive about the company. They aren't doing a public service or anything. It's a reason why companies like credit suiss…

It just ruins their reputation as a reliable short-seller. It's short-sighted. They had good reports until now.

How does it ruin their reputation as short sellers?

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#55

Post by rossdavidh »

numlocked wrote: post #23

"CEO Jack Dorsey has publicly touted how Cash App is mentioned in hundreds of hip hop songs as evidence of its mainstream appeal. A review of those songs show that the artists are not generally rapping about Cash App’s smooth user interface—many describe using it to scam, traffic drugs or even pay for murder." Hindenburg made a music video compiling the references that is...uh...worth watching: https://www.youtube.co…

I have to say, this feels more like a clueless white rich guy trying to seem cool by mentioning hip hop songs he never actually listened to (or understood if he did hear them), that one of his underlings told him about, rather than evidence of "fraud".

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#56

Post by boh »

overthrow wrote: post #24

I didn't know Square had changed their name to Block. Looks like it happened in December 2021: https://investors.block.xyz/news/news-details/2021/Square-In... That said this really seems overblown. The report seems to mostly just talk about Cash App. Square Payments, Weebly and TIDAL are not even mentioned. Afterpay is mentioned but that was a 2022 acquisition so the problems likely predate Block's involvement. It fe…

If the app is the primary business driving profitability growth you can use it to indict the company. The stock price isn't based on non-performing parts of the business.

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#57

Post by quantified »

numlocked wrote: post #23

"CEO Jack Dorsey has publicly touted how Cash App is mentioned in hundreds of hip hop songs as evidence of its mainstream appeal. A review of those songs show that the artists are not generally rapping about Cash App’s smooth user interface—many describe using it to scam, traffic drugs or even pay for murder." Hindenburg made a music video compiling the references that is...uh...worth watching: https://www.youtube.co…

Oh, you're not taking these depictions of drug payments and assassination payments literally are you? This is all artistic display for a persona and a set of practices that only exists as a performance.

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#58

Post by hef19898 »

johngladtj wrote: post #54
likecarter wrote: post #44

Earlier quoted context omitted.

It just ruins their reputation as a reliable short-seller. It's short-sighted. They had good reports until now.

How does it ruin their reputation as short sellers?

By targeting a SV darling like Dorsey?

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#59

Post by tiny_ta »

baryphonic wrote: post #28
propercoil wrote: post #2

[flagged]

The report is extremely long, but having gone through the bullet points, the case seems quite overstated. There are in fact millions of people who use Cash App, though it's probably less popular overall than Venmo. I know this because my wife and her friends will mention it and Venmo when talking about splitting bills. (Given the technical challenges Wells Fargo has had lately, I'm not sure who trusts Zelle.) A lot o…

Address verification is where the bureaus like Transunion and Experian come in. These vendors have a gold mine of information that should allow a company to verify a host of their users' attributes - not just addresses.

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#60

Post by baryphonic »

phphphphp wrote: post #36
baryphonic wrote: post #28

Earlier quoted context omitted.

The report is extremely long, but having gone through the bullet points, the case seems quite overstated. There are in fact millions of people who use Cash App, though it's probably less popular overall than Venmo. I know this because my wife and her friends will mention it and Venmo when talking about splitting bills. (Given the technical challenges Wells Fargo has had lately, I'm not sure who trusts Zelle.) A lot o…

If verifying people is hard and so a company chooses to take the easy route of not bothering and therefore attract lots of customers who do illegal things, surely in any world that's at the very least knowingly facilitating illegal conduct? There are a lot of platforms that do far more than Block to verify people -- Block absolutely could do the same if they wanted to. This is what Block do: https://www.youtube.com/w…

I don't think the allegation is that Block doesn't check, it's that the check is vulnerable to fraud. If Block rolled out a better verification system next week, based on off-the-shelf components, would they no longer be a fraud?
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