Block shares drop after Hindenburg takes short position

Shares of payments company Block dropped as much as 19% before the open on Thursday after famed short seller Hindenburg released a scathing report against the company.

Why it matters: Hindenburg most recently created a veritable hurricane in Indian stocks after going after billionaire Gautam Adani's conglomerate.

Driving the news: "The 'magic' behind Block’s business has not been disruptive innovation, but rather the company’s willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics," Hindenburg's report says.

• Hindenburg said it spent two years on the investigation. The short seller claims a significant amount of accounts it reviewed were fake, tied to fraud, or associated with another existing Block customer.

What they're saying: Block released a statement mid-day Thursday, saying the company plans to work with the SEC and explore legal action against Hindenburg Research "for the factually inaccurate and misleading report they shared about our Cash App business today."

What's happening: As of 2:00 pm, Block shares were down about 15%.

This story has been updated to include Block's response to Hindenburg's report and current market trading price.