UPDATE 9/10/24: Roblox has responded at length to yesterday’s report by Hindenberg Research that alleges the platform has not been transparent with shareholders over its user activity metrics, and that there are continued further examples of the platform being used for adult activity around minors.
In a statement, Roblox said it “rejects” the report and pointed to previously-released details of its efforts to try and combat inappropriate content. On the issue of user activity, such as Daily Active Users (DAUs) being inflated by secondary accounts and bots, Roblox said it has previously communicated that its daily active user totals were “not a measure of unique individuals accessing Roblox” – and has previously acknowledged that “fraud and unauthorised access to our platform may contribute, from time to time, to an overstatement of DAUs.”
ORIGINAL STORY 8/10/24: A new report has alleged that Roblox misleads investors by falsely reporting player numbers, and has highlighted yet more examples of inappropriate – and allegedly, illegal – content being shared via the platform.
The report, published by short-selling firm Hindenberg Research (via Wall St Journal), claims that daily player counts and engagement statistics have been inflated by Roblox since 2021, based on interviews with multiple former employees at the company.
A Roblox spokesperson has responded to the report to say it was “simply misleading”.
More damning still are a fresh set of examples that appear to show Roblox’s content moderation system failing to keep children safe – and to stop adult content circulating.
“We firmly believe that Roblox is a safe and secure platform,” a Roblox spokesperson said in response.
The report includes examples seen by Hindenberg Research of Roblox experiences named after sex offender Jeffrey Epstein and sex trafficker P Diddy, as well as chatrooms where Hindenberg staff say they witnessed child sexual abuse images being openly traded.
Roblox’s share price tumbled 4.6 percent in the wake of Hindenberg Research’s report being published – and it’s worth acknowledging that the business model of short-selling firms such as this is to benefit as a result. Still, this on its own does not bring any of its research into doubt, and any share price recovery from the report being proven incorrect would expose it to a huge amount of risk.