Muddy Waters' Carson Block Isn't Short On Snap, 'But Might Be' In The Future

Muddy Waters' Carson Block is one of the most notable short-seller investors and one of the stocks on his watchlist as a potential target is Snap Inc SNAP.

Speaking as a guest on Wednesday's "Bloomberg Markets" segment, Block acknowledged he isn't currently short Snap "but might be" in the future if the company doesn't address his three main concerns: 1) corporate governance , 2) sustainability of the business model and heavy debt load and 3) ethical issues.

Corporate Governance

While Snap's corporate governance issues are well communicated, including a lack of voting rights, Carson said this isn't even his main concern. He is more concerned with Snap's CEO Evan Spiegel's $800 million stock bonus after the company completed its initial public offering with "few to no strings attached to it."

Business Concerns

Block stated that while there are some business concerns, he is still taking a deep-dive into this area to form his view. Among the more concerning areas is Snap's heavy debt load in the form of commitments for cloud hosting.

Ethical Issues

Finally, Block highlighted a whistle-blower case from a former employee who was hired from Facebook. After just three weeks on the job, the employee was fired and is saying in a lawsuit that Snap mislead investors in the run-up to its IPO.

Snap was claiming at the time it was growing at a double-digit rate on a month-over-month basis in terms of daily active users. But the terminated employee claimed that the real growth rate was in the low- to mid-single digits on a quarter-over-quarter basis.

Meanwhile, Snap's first ever earnings report as a public company showed that its growth rate is more in line with what the terminated employee claimed at the time.

At last check, shares of Snap were up 3.75 percent at $21.30.