The relief for music service Tidal is that it’s not mentioned at all in a scathing report about its parent company Block, published yesterday by financial firm Hindenburg Research.
We’re not sure how long that relief will last though, because the report is a deeply troubling moment for Block that has already knocked 15% off the company’s share price.
The report is very long and detailed, but its introduction sets out its stall with maximum punch.
“Block has systematically taken advantage of the demographics it claims to be helping,” it claimed. “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.”
Ouch. The company’s Cash App service comes in for particular scrutiny over whether it’s being used for criminal purposes.
That said, we’re not keen on the part where Hindenburg Research cites hip-hop lyrics as proof of criminality: it plays into some of the tropes that the music industry’s ‘Protect Black Art’ campaign has been criticising.
Block, as you’d expect, is furious about this, and has issued its own rebuttal, pointing to Hindenburg Research’s nature as a ‘short-seller’, profiting if the share price of the companies it investigates falls.
Block has threatened to sue the company, saying that “Hindenburg is known for these types of attacks, which are designed solely to allow short sellers to profit from a declined stock price. We have reviewed the full report in the context of our own data and believe it’s designed to deceive and confuse investors”.
This is no storm in a teacup though: when Hindenburg recently published a similar report about an Indian corporation called Adani earlier this year, its listed companies lost 60% of their share value.
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