JPMorgan says Block response to short report should help ‘redirect conversation’

JPMorgan analyst Tien-tsin Huang notes that Block responded to recent investor questions that have followed last week’s short report and believes the company "did a good job" addressing concerns around measurement and verification of transacting active Cash App users, the amount of fraud and illicit activity they see on their platform, and their level of investment in compliance. The stock closed down 15% the day last week’s short report was released, but has since recovered about 60% of the value lost that day and is "attractive at current levels," the analyst tells investors. JPMorgan, which reiterates an Overweight rating on shares of Square’s parent, thinks today’s response should "help redirect the conversation" back to its core thesis around Block’s "strong operating leverage potential" and "premium growth."