Block short seller response likely not enough, says Citi

Citi says Hindenburg Research’s short report on Block raises two important lines of questioning: Are Cash App fraud controls up to both regulatory and industry standards, and if not, are Cash App’s growth profile, revenue retention, and user engagement the result of a mass user perception that the platform has inadequate fraud controls. Further, given Block’s mission to serve the underserved, proportionality is also a highly relevant consideration, the analyst tells investors in a research note. Citi had hoped Block’s response would be more detailed and believes "exploring legal action" will likely not be enough to settle investor concerns. The firm has a Buy rating on Block with a $90 price target.