Jack Dorsey, the co-founder and former CEO of Twitter, is no stranger to ups and downs in his net worth. However, in recent years, his wealth has taken a hit, with a recent Hindenburg short causing a tumble of $526 million. Let’s take a closer look at what happened and what it means for the tech billionaire.
First, it’s important to understand what a short is in investing. A short is when an investor borrows shares of a company and immediately sells them, hoping to buy them back at a lower price and return them to the lender, pocketing the difference as profit. Shorting is a common practice in the world of investing, but it can also be risky if the stock price rises instead of falls.
Hindenburg Research, a short seller that has been known to target high-profile companies, recently published a report accusing Square, a payments company co-founded by Jack Dorsey, of being a “sham.” Hindenburg’s report claimed that Square’s financials were misleading and that the company’s stock was overvalued. The report also alleged that Dorsey had inflated Square’s user numbers and engaged in insider trading.
Block co-founder’s net worth drops by the most since May.
The report caused Square’s stock to fall by as much as 8% in one day, wiping out $2.7 billion in market value. Jack Dorsey, who owns a 13.5% stake in Square, saw his net worth drop by $526 million as a result.
Dorsey has not publicly responded to the allegations made by Hindenburg, but Square issued a statement calling the report “false and misleading.” The company defended its financials and said that it “operates with the highest integrity.”
This is not the first time that Dorsey’s net worth has taken a hit. In 2016, he was replaced as CEO of Twitter, a move that caused the company’s stock to fall by 6% and Dorsey’s net worth to drop by $90 million. In 2020, he also lost $1 billion in net worth after the coronavirus pandemic caused a decline in the stock market.
Block plans to explore legal action against the Hindenburg short-seller.
Despite these setbacks, Dorsey remains a billionaire, with a net worth of around $12.5 billion. He is also the CEO of Square, which has continued to perform well despite the recent short. In fact, Square’s revenue grew by 141% in the fourth quarter of 2020, and the company recently announced plans to acquire the Australian fintech firm Afterpay for $29 billion.
Jack Dorsey’s net worth has taken a hit after a recent Hindenburg short caused Square’s stock to fall. However, Dorsey remains a billionaire and is the CEO of a company that continues to perform well. While short selling can be risky, it is an important part of the investing world, and investors like Dorsey must be prepared to weather the ups and downs of the market.