Hindenburg Shutdown: 5 Biggest Crashes That US-Based Short Seller's Report Caused; From Adani To Super Micro

US-based short seller, Hindenburg Research is shutting down, shocking investors and market widely. Why? Because Hindenburg over the past two years has gained notorious fame for itself! Its research report had caused some of the biggest market routs from the US to India, due to its allegations over some major companies. Nate Anderson, the founder of Hindenburg announced the disbandment on January 15.

Regarding the reason behind disbanding, Anderson in his note said, "There is not one specific thing-no particular threat, no health issue, and no big personal issue."

With a goodbye to Hindenburg, here are 5 infamous crashes that its research report had caused.

1. Gautam Adani's Group:

One of the biggest report by Hindenburg had to be against Adani Group and its chief Gautam Adani. At that time, Gautam Adani even emerged among top 3 richest man in the world, while his stocks listed on BSE and NSE were among top performers. Hindenburg has taken more jibe on Adani than any other companies, even roped in India's market regulator Sebi and one of the largest Indian bank, Kotak Mahindra Bank in its allegations. It was all over the news and it was sensational!

The first mind-boggling report was released on January 24, 2023, where Hindenburg accused Indian conglomerate Adani Group to have engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades. The market cap was around $218 billion of Adani Group then!

However, that one report was enough to cause the damage, leading in one of the biggest market rout and intense pressure in Indian stock market as all Adani Group stocks were in a back-to-back fallout! To be precisely, consistent selloffs in Adani Group triggered an eye-bulging $150 billion rout, with net worth of Gautam Adani also falling drastically.

In a span of less than two weeks that followed Hindenburg's report, Adani Group's market value crumbled from Rs 19.2 lakh crore on January 24, 2023, to below Rs 7 lakh crore on February 7th of that same year. Not just that even the listed companies who were invested in Adani Group faced immense selling pressure. The Adani Hindenburg row saw protests from oppositions to a court-room drama in the Supreme Court and extensive investigation from Sebi.

Adani Group had denied all allegations over and over again! The last report on Adani by Nate Anderson-backed Hindenburg was on July 1, 2024, where it responded to Sebi's show cause notice and revealed that they are in the process of filing an RTI seeking the names of SEBI employees that worked on both the Adani matter and the Hindenburg matter. The short seller accused Sebi of protecting perpetrators of fraud while attacking those who expose it shakes the trust of investors in the regulatory framework far more than our accurate and fully-contextualized quoting of a source.

Since then, there has been no new report on Adani Group. And even when Adani is out of the woods with clearance from the Supreme Court and Sebi, their market value is yet to reach pre-Hindenburg level.

As of January 16, 2025, all 10-listed stocks of Adani Group cumulatively have market cap around Rs 14.24 lakh crore, at the time of writing.

2. Super Micro Computer:

Super Micro was seen as a notable competitor to world's largest AI company, Nvidia who needs no introduction. Hindenburg took a jibe at Super Micro on August 27, 2024, and at that time the company's market cap was $35 billion. After a 3-month investigation, Hindenburg dropped the nerve-wrecking report shed light on Super Micro's relationships with both disclosed and undisclosed related parties, which the short seller claimed to serve as fertile ground for dubious accounting.

Apart from this, Hindenburg highlighted that Super Micro was pleaded guilty in felony count of exporting banned components to Iran in 2006. The short seller also revealed Super Micro's involvement of exporting high-tech components to Russia since its invasion of Ukraine and despite the US government's "stringent restrictions and bans on exports" to the Putin-led country.

In all, Hindenburg alleged that Super Micro is a serial recidivist. The short seller said that time, "It benefitted as an early mover but still faces significant accounting, governance and compliance issues and offers an inferior product and service now being eroded away by more credible competition."

On the day the report was released, Super Micro stock traded at $54.76 but plummeted sharply by 19% on August 28 to $44.35. Currently, the stock is at $30.99, which is still lower by 43% from August 27th, 2024.

3. BLOCK:

Formerly known as Square Inc, the popular crypto exchange Block had a market cap of $44 billion when Hindenburg released its extensive 2-years of investigative report.

Hindenburg on March 23, 2023, said, "Block has systematically taken advantage of the demographics it claims to be helping. 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."

Hindenburg accused Block of having wildly overstated its genuine user counts and understated its customer acquisition costs. It stated that former employees estimated that 40%-75% of the accounts they reviewed were fake, involved in fraud, or were additional accounts tied to a single individual.

On the day of the report itself, Block Inc.'s share price plunged by nearly 15% to $61.88 apiece. However, unlike other stocks, Block has managed to recover and surpass Hindenburg's impact. The stock price is currently at $84.79, up by 54% from the March 23, 2023, price level.

4. Sezzle Inc:

Sezzle, a Minneapolis-based 'Buy Now, Pay Later' (BNPL) company founded in 2016, was the second last report of Hindenburg on December 18, 2024. Hindenburg observed that Sezzle's stock was up 2,015% in a year till December 18, driven by investor confidence that it is a growing, profitable business that recently reported 71% year-over-year revenue growth. Also, the short seller pointed out that Sezzle traded that time at a premium 5.5x forward sales multiple, representing a 63% premium to peers, based on these lofty expectations.

But, Hindenburg claimed that their findings show Sezzle is borrowing expensive capital to make extremely risky loans through a struggling platform that is rapidly losing customers and merchants. All the while, insiders are selling stock or cashing out through a massive margin loan.

It said, "Sezzle seems to be boosting its near-term subscription numbers with sketchy enrollment practices. The company has faced numerous customer complaints for enrolling users into recurring monthly subscriptions without their awareness, according to user complaints and the company's own FAQ." Hindenburg lastly said they do not see Sezzle surviving in the long-term.

This report, however, caused investors to dump Sezzle stock. On December 19, Sezzle was down by nearly 25%. Currently, the stock is near the $260 price level, which is still far from the pre-Hindenburg level.

5. PACS Group:

The Utah-based skilled nursing facilities (SNFs) operator, PACS Group faced massive rout after Hindenburg's research report on November 4, 2024, accused the company of abusing a COVID-era waiver, inappropriately accessing skilled care Medicare benefits for thousands of patients across its national portfolio of facilities, according to its investigation.

Till the November 4th report, PAC was said to have an m-cap of $6.7 billion, and it debuted on exchanges in April last year as well with its stock price rising by a whopping 104%, to which Hindenburg pointed was one of the most successful IPOs of 2024. Hindenburg carried out a 5-month investigation before releasing its bombshell report.

Right after the report, investors carried a frenzy selling in PACS share price. On November 5th alone, the stock nosedived by 25.6%, followed by another 42% decline on November 6th. From the 41 price level, PACS stock was below the $18 price level in two days. Currently, the stock price is at $13.82, which is still lower by 66.6% from November 4th 2024.