Update, 16:00 Polish time, October 8: Roblox posted a lengthy statement on its account Investor relations website debunking the Hindenburg Research report, calling financial claims “misleading” and claiming that “safety and civility” have been “fundamental” to Roblox since its inception.
“Every day, tens of millions of users of all ages can use Roblox safely and positively by following the company’s policies community standards,“, said the company. “Roblox takes any content or behavior on the platform that does not comply with its standards extremely seriously, and Roblox has a robust set of proactive and preventive security measures designed to capture and prevent malicious or harmful activity on the platform.”
Indicates recent blog post for more information.
On the financial side, Roblox said the authors of the Hindenburg report “are short selling and have an agenda regardless of the substance of Roblox’s business model and performance.” He added that “Roblox revenues are growing rapidly,” pointing to a number of numbers that confirm this.
“An examination of Roblox’s GAAP balance sheet and GAAP cash flow statement clearly demonstrates this,” he continued. “The focus on cash accounting and cash flow are topics the company has consistently focused attention on with investors since its days as a private company. The authors did not attempt to highlight any of these elements because positive facts simply do not support their agenda.
Finally, Roblox said Hindenburg “has neglected to accurately present the company’s public information” and said it will disclose more financial information and answer questions on its upcoming third-quarter earnings call on October 31.
Previous story as follows:
Shares of Roblox Corporation fell on Tuesday after a new report by the investment company Hindenburg Researchwho accused her of deliberately inflating daily active user statistics and supporting what he described as an “X-rated pedophile hell” for children.
As reported by the portal Wall Street JournalHindenburg Research is a well-known short-selling firm known for researching the stocks of high-profile companies and placing bets against them, sometimes leading to investigations by the U.S. Department of Justice. His previous targets include green transportation company Nikola, India’s Adani Group and Super Micro Computer.
In its report, Hindenburg Research says Roblox’s claims of 79.5 million daily active users are overstated by 25-42 percent, citing a tech consultant who it said monitored 7,200 Roblox games on 2.1 million servers, collecting 297.7 million rows of real-time data player. It also notes that in 2023, Roblox told the SEC it was “unable to determine whether a user has multiple accounts” and claims much of the involvement is due to bot rings operating out of countries such as Vietnam.
Elsewhere in the report, the report accuses Roblox of being a haven for guardians and pedophiles due to its lack of “prior controls preventing them from joining the platform.” One of the most serious allegations in the report is that it discovered a group called “Adult Studios,” which has since been blocked, with 3,334 members openly selling child pornography and soliciting sexual activity.
Roblox’s response is a complete failure to address the two main allegations in our report, including:
1. Evidence that Roblox has been systematically lying for years about the number of people on its platform and their true level of engagement.
2. That the platform is… pic.twitter.com/Tj2KiANonI
— Hindenburg Research (@HindenburgRes) October 8, 2024
A Roblox spokesperson, in a statement to the Wall Street Journal, called the report “misleading” and accused Hindenburg Research of having an agenda. “We strongly believe that Roblox is a safe platform, as evidenced by the financial metrics we report.”
Hindenburg Research responded, arguing that the company’s response failed to address the report’s main allegations. IGN has reached out to Roblox Corporation for further comment.
Many of the allegations contained in the report have been circulating for some time. 2023 Class Action Lawsuit California has accused the Roblox corporation for misrepresenting “the effectiveness of filtering technology and its ability to keep the site sheltered and appropriate for children.” 2021 Report by YouTube Channel People create games claimed that Roblox used child labor.
“Overall, we believe that Roblox has adopted a Silicon Valley ‘growth at all costs’ approach, whether by misleading or outright lying to investors about key metrics, or by opening its platform to hazardous
predators and illegal content inappropriate for children,” the report says, with Hindenburg Group claiming to have taken a short position in Roblox corporation stock.
Kat Bailey is IGN’s news director and co-host of Nintendo Voice Chat. Got a tip? Send her a DM at @the_katbot.
