- Wedbush Securities investment firm said it's not seeing anything illegal with payment company Block.
- Short-seller Hindenburg alleged that Block misled investors with "inflated metrics."
Wedbush Securities has said it's not seeing anything illegal with payment company Block run by Twitter founder Jack Dorsey, following the release of a scathing short-seller report.
On Thursday, Hindenburg Research alleged after a two-year probe that Block – formerly known as Square – misled investors with "inflated metrics" and facilitated fraud.
But Wedbush's managing director of equity research Moshe Katri said the payment company "is a legitimate player in the space [and] fundamentally, they do have the best monetization model in the FinTech industry."
"At this point, we're not really seeing anything illegal if you will. We knew about the after pay transaction, we knew that this is a transaction that kind of didn't really work very well for the company. So again, so far, there's really nothing new now," Katri told CNBC on Friday.
"At this point, so far, I'm not seeing anything that tells me that the accounting here is fraudulent and the actual numbers here are not really the real numbers. So we're going to have to wait and see," he added.
Katri said Wedbush has a neutral rating on the stock based on the company's valuation. Hindenburg alleged Block "exaggerated claims of profitability and generous valuation multiples."
Other analysts, like Lisa Ellis of MoffettNathanson, have also said Hindenburg is overstating the magnitude of Block's problems.
"They're overstating the problems and then also their sort of holistic story of Block is incomplete," Ellis told CNBC. She added that they are "cherry-picking what [she] would argue is very likely a very small issue."