Hold up -- Block Stock Is Not a Buy on the Dip. Here's Why.
Controversial hedge fund Hindenburg Research just found its latest short target. Hindenburg publishes research on companies that it believes deserve more scrutiny. In its latest piece, the hedge fund identified payments company Block (NYSE: SQ) as its new target. The day following the report, Block stock fell roughly 15%. Let's dig into Hindenburg's claims and analyze if this is a buy the dip opportunity.
Generally speaking, investors should act with an extra level of caution when a company is slapped with a short report. In its most basic terms, shorting a stock means to bet against it. For example, if an investor thought that the price of a particular stock may go down, they could (potentially) profit by purchasing put options.
When it comes to Hindenburg, the company seems to have a knack for creating headlines while also, frankly, pointing out the obvious. Per a Bloomberg report published earlier this year, Hindenburg was short Twitter and electronic vehicle company Nikola. Both of these equities were troubled companies. In the case of Nikola, the company has been under fire since its public debut in 2020. As for Twitter, well, that's Elon Musk's problem now.
Source Fool.com
