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While this doesn't look great, it doesn't really seem up to the standards of past Hindenburg reports. Block's main product is credit card processing and point-

While this doesn't look great, it doesn't really seem up to the standards of past Hindenburg reports. Block's main product is credit card processing and point-of-sales, for retailers, and they have a reputation for being the easiest to use and deal with. I could easily believe that they are not doing their KYC work and that the feds will soon make them do so, but it doesn't really seem to add up to the company being a "fraud". Which, to be fair, the Hindenburg headline doesn't say, it's "Block: How Inflated User Metrics and “Frictionless” Fraud Facilitation Enabled Insiders To Cash Out Over $1 Billion". Facilitating fraud (by not doing enough KYC, etc.) rather than the company being a fraud.

JumpCrisscross 4y ago
> it doesn't really seem to add up to the company being a "fraud" The allegations in this report add up to wilfulness. That could result in the company’s money transmission licenses being revoked.
- appleiigs 4y ago
  That's a stretch. They'll be able to remedy. Maybe they'll get fined. I'm sure they're a lot more steps in between before getting shut down.
ajoseps 4y ago
Cash app now makes up the majority of Block's revenue. https://s29.q4cdn.com/628966176/files/doc_financials/2022/q4/f0d4876f-97d5-495a-b76b-1316e79608b9.pdf https://s29.q4cdn.com/628966176/files/doc_financials/2022/q4... page 74 of their 2022 Q4 10-K shows a per segment (between Square and Cash App) breakdown of revenue
- ac29 4y ago
  Revenue yes, profit no (though profitability is very close to evenly split).
- appleiigs 4y ago
  For revenues, Square is $7B vs Cash App is $10B. However, the gross profit is both Square and Cash App are $3B.
- rossdavidh 4y ago
  Very interesting, thanks for pointing me to that document. It does show Square with +29% growth in net revenue (+30% profit growth), whereas Cash App shows 14$ decline in revenue. They managed to still get profit growth in Cash App by cutting cost of revenue even faster than their revenue dropped, but that does not seem to bode well for Cash App being able to sustain greater KYC due diligence, etc. I think they may have a better future in the Square-related business than in the Cash App part, especially if fed pressure on them to do more KYC in Cash App grows (which I would guess it will).
  - rossdavidh 4y ago
    "Cash App shows 14%" rather than "14$", obviously, but it's too late to edit now. :)

JumpCrisscross 4y ago

> it doesn't really seem to add up to the company being a "fraud" The allegations in this report add up to wilfulness. That could result in the company’s money transmission licenses being revoked.

appleiigs 4y ago
That's a stretch. They'll be able to remedy. Maybe they'll get fined. I'm sure they're a lot more steps in between before getting shut down.

ajoseps 4y ago

Cash app now makes up the majority of Block's revenue. https://s29.q4cdn.com/628966176/files/doc_financials/2022/q4/f0d4876f-97d5-495a-b76b-1316e79608b9.pdf https://s29.q4cdn.com/628966176/files/doc_financials/2022/q4... page 74 of their 2022 Q4 10-K shows a per segment (between Square and Cash App) breakdown of revenue

ac29 4y ago
Revenue yes, profit no (though profitability is very close to evenly split).
appleiigs 4y ago
For revenues, Square is $7B vs Cash App is $10B. However, the gross profit is both Square and Cash App are $3B.
rossdavidh 4y ago
Very interesting, thanks for pointing me to that document. It does show Square with +29% growth in net revenue (+30% profit growth), whereas Cash App shows 14$ decline in revenue. They managed to still get profit growth in Cash App by cutting cost of revenue even faster than their revenue dropped, but that does not seem to bode well for Cash App being able to sustain greater KYC due diligence, etc. I think they may have a better future in the Square-related business than in the Cash App part, especially if fed pressure on them to do more KYC in Cash App grows (which I would guess it will).
- rossdavidh 4y ago
  "Cash App shows 14%" rather than "14$", obviously, but it's too late to edit now. :)