Atlantic Equities downgrades Block pending more clarity on short report

Atlantic Equities analyst Kunaal Malde downgraded Block to Neutral from Overweight with a price target of $70, down from $95. The Hindenburg Research short report allegations focused on Cash App’s predatory fees, fake user accounts, and links to criminal activity, the analyst tells investors in a research note. The firm is less concerned about the high fees and user metrics, but says a significant proportion of Block’s profits could be impacted longer term by improving risk controls to reduce illegal activity. In addition, Block’s initial response "lacked the specific rebuttals against Hindenburg’s arguments that we would have hoped for," Atlantic writes. With Block’s valuation "remaining high," the firm believes it is prudent to turn Neutral pending "more comfort around sizing the exposure to these risk factors."