Twitter co-founder Jack Dorsey loses over $500 million in just one day, here is why

Twitter Founder Jack Dorsey lost over $500 million in net worth in a single day after a report by Hindenburg Research raised questions about the business practices of Block, a company in which Dorsey is a major investor. The report accused Dorsey of engaging in unethical and possibly illegal practices, including misleading investors and the government about the company's finances and details.

According to the Bloomberg Index, which provides a daily ranking of the world's richest people, Dorsey's fortunes plunged by $526 million within a day, and he is now worth just $4.4 billion. With an 11% drop in his total fortune, this has reportedly been the worst single-day decline since May for the Twitter founder.

Hindenburg Research report against Block

The drastic decline in Jack Dorsey's wealth followed the release of a report by Hindenburg Research, which alleged that Dorsey's company, Block, is engaged in fraudulent practices against consumers and the government. The report quotes that "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 a revolutionary technology, and mislead investors with inflated metrics."

While the allegations made in the report are not yet proven, Block has also denied the allegations and is planning to take legal action. However, the negative report has shaken the stock market price of the company and Dorsey's net worth. Notably, most of Jack Dorsey's fortune is tied up with Block, and with the fall in stocks, his net worth also took a steep dip.

Jack Dorsey stake in Twitter

Jack Dorsey, who founded Twitter, derives his wealth from his stakes in Twitter, Block, and other companies he has invested in. Dorsey reportedly retained a 2.4% stake in Twitter after Elon Musk completed his $44 billion acquisition. He also owns about 10% of Block's stocks, which resulted in the recent decline in his wealth.

As for the US-based short-seller Hindenburg Research, it is not the first time it has released a shocking investigation against big tycoons. Earlier in January, the report published an investigation on the Adani Group empire, causing a significant fall in the company's stocks. Adani, who last year reached almost the second-richest person, has now fallen to the 21st position with a $60.1 billion fortune on Bloomberg's Index.