Prof G Markets: First Citizens Acquires SVB, Hindenburg Shorts Block, and Nike vs. Hermès

Hindenburg Allegations

Hindenburg Research's short position against Block has sparked significant debate. The report accuses Block's Cash App of inflating user numbers and facilitating illegal activities, but Ed Elson finds these claims unconvincing, suggesting they lack substantial evidence 1. Scott Galloway notes that Block's response was to counter each allegation with data, effectively refuting the accusations 2.

Block responded exactly as they should have done, with one small tweak. And that is, they responded with data.

--- Scott Galloway

He believes the legal threats from Block might appear defensive, and the stock is likely to recover as the market moves on 2.

   

Short Selling

The dynamics of short selling are complex and often controversial. Scott Galloway compares Hindenburg's approach to Bill Ackman's infamous short on Herbalife, suggesting that Hindenburg might be overreaching with its claims against Block 3. He explains that short sellers can exaggerate but must avoid lying, as legal recourse is only possible if lies cause direct economic harm 2.

This is free speech. Your only legal recourse is when a company knows they're lying and spreads those lies.

--- Scott Galloway

Despite the controversy, Galloway predicts that Block's stock will stabilize, indicating the resilience of companies under short-selling pressure 2.