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

Short Sale

Scott Galloway and Ed Elson scrutinize Hindenburg's short sale strategy on Block, questioning its validity and potential legal implications. Scott compares this move to Bill Ackman's infamous short position on Herbalife, suggesting that Hindenburg might be overreaching without substantial evidence 1. Ed highlights the standard business practices criticized by Hindenburg, such as overvaluation and reliance on non-GAAP adjustments, which are common in the industry 1.

This feels like a bridge too far. This feels like, for lack of a better term, that they're reaching.

--- Scott Galloway

The discussion raises questions about the ethical and legal boundaries of aggressive short selling 2.

   

Market Impact

The market's reaction to Hindenburg's report on Block was swift, with shares dropping significantly, yet Ed Elson remains skeptical of the allegations. He argues that accusations of fraudulent user numbers and illegal activities linked to Cash App lack credible evidence 3. Ed believes that Hindenburg's extensive two-year investigation might have led them to overcommit to their thesis, potentially damaging their credibility 3.

To me, this actually hurts the credibility of Hindenburg as a serious short seller investigative firm.

--- Ed Elson

Scott predicts that Block's stock will recover, suggesting that Hindenburg's gamble may not pay off this time 4.