This is Why Short Sellers are Targeting Block's Cash App
This is a single insight from This Week in Apps - The Ban That Isn't Coming. Check out the full article for more insights.
News broke yesterday that Cash App, which is owned by Block (aka Square), is in trouble thanks to a variety of shady business practices. The report came from notorious short-seller Hindenburg Research, which managed to drop Block's stock by as much as 15% nearly instantly.
There are a lot of allegations in the report, which Block rejects, but putting both of those aside, a short seller targeting a company can only mean one thing - growth.
Is that the case? Let's have a look at Cash App's downloads:
I normally prefer not to skip to the conclusion right away, but this is an exception. Since 2017, Cash App's downloads rose nearly 10x according to our estimates.
Starting at around 500K in 2018 and rose nicely year over year, but the real growth started in mid 2021 with downloads more than doubling between June of 2021 and July of 2022.
Such growth in a fairly static niche where PayPal is still popular, is a good way to earn a big target. But... Hindenburg's report talks about fraud related to fraud around covid stimulus payments, which happened in that same period. Maybe there's more to it?
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All figures included in this report are estimated. Unless specified otherwise, estimated revenue is always net, meaning it's the amount the developer earned after Apple and Google took their fee.
