Replace, 4 p.m. PT, October 8: Roblox has posted a prolonged assertion to its Investor Relations web site refuting the Hindenburg Analysis report, calling the monetary claims “deceptive” and asserting “security and civility” have been “foundational” to Roblox since its inception.
“On daily basis, tens of thousands and thousands of customers of all ages have protected and optimistic experiences on Roblox, abiding by the corporate’s Group Requirements,” the corporate stated. “Roblox takes any content material or habits on the platform that doesn’t abide by its requirements extraordinarily severely, and Roblox has a sturdy set of proactive and preventative security measures designed to catch and forestall malicious or dangerous exercise on the platform.”
It factors to a current weblog publish for extra data.
Regarding the financials, Roblox stated the authors of the Hindenburg report are “are brief sellers and have an agenda no matter the substance of Roblox’s enterprise mannequin and outcomes.” It added that “Roblox’s topline is rising shortly,” pointing to a bevy of numbers to maintain that.
“An examination of Roblox’s GAAP steadiness sheet and GAAP money move assertion makes that clear,” it continued. “The concentrate on money bookings and money move are themes that the corporate has targeted on persistently with traders courting again to when it was a non-public firm. The authors made no try to focus on any of that as a result of the optimistic information merely don’t help their agenda.”
Lastly, Roblox stated Hindenburg “uncared for to precisely report on the corporate’s public disclosures,” and stated it might disclose extra monetary data and reply questions throughout its upcoming third quarter earnings name on October 31.
Earlier story as follows:
Roblox Company shares dipped on Tuesday after a brand new report from funding agency Hindenburg Analysis, which accused it of deliberating inflating its each day lively consumer stats and fostering what it described as an “X-rated pedophile hellscape” for kids.
As reported by the Wall Avenue Journal, Hindenburg Analysis is a well known short-selling agency identified for investigating high-profile shares and making bets towards them, which generally results in investigations by the U.S. Justice Division. Its earlier targets have included inexperienced transportation firm Nikola, India’s Adani Group, and Tremendous Micro Pc.
In its report, Hindenburg Analysis says Roblox’s declare of 79.5 million each day lively customers is inflated by between 25 p.c and 42 p.c, citing a technical advisor that it says monitored 7,200 Roblox video games throughout 2.1 million server, accumulating 297.7 million rows of real-time participant information. It additionally notes that in 2023, Roblox informed the SEC that it’s “unable to determine if a consumer has a number of accounts,” and claims that a considerable amount of engagement stems from bot rings working out of nations akin to Vietnam.
“A former information scientist informed us that exercise in Vietnam ‘inflated loads of our numbers. Like loopy, insane, by way of engagement, DAU[s],” the experiences says.
Elsewhere, the report accuses Roblox of being a haven for groomers and pedophiles as a consequence of its lack of “up-front screening to forestall them from becoming a member of the platform.” In considered one of its most severe accusations, the report claims to have discovered a gaggle referred to as “Grownup Studios,” which has since been blocked, with 3,334 members overtly buying and selling little one pornography and soliciting sexual acts.
Roblox’s response is an abject failure to handle the 2 core allegations in our report, together with:
1. Proof that Roblox has been systematically mendacity for years in regards to the variety of individuals on its platform and their real stage of engagement.
2. That the platform is a… pic.twitter.com/Tj2KiANOnI
— Hindenburg Analysis (@HindenburgRes) October 8, 2024
A Roblox spokesperson referred to as the report “deceptive” in an announcement to the Wall Avenue Journal and accused Hindenburg Analysis of getting an agenda. “We firmly consider that Roblox is a protected and safe platform and within the monetary metrics we report.”
Hindenburg Analysis responded by arguing that the corporate’s response failed to handle the report’s core allegations. IGN has reached out to the Roblox Company for any additional remark.
Most of the accusations inside the report have been circulating for a while now. A 2023 class motion lawsuit in California accused the Roblox Company of being deceptive about “the efficacy of its filtering applied sciences and its means to make the location protected and applicable for kids.” A 2021 report by YouTube channel Individuals Make Video games alleged that Roblox was exploiting little one labor.
“General, we predict Roblox has adopted the Silicon Valley strategy of ‘development in any respect prices’, whether or not by deceptive or outright mendacity to traders about its key metrics or by opening its platform to harmful predators and illicit content material unsuitable for kids,” the report says, with the Hindenburg Group saying that it has taken a brief place in shares for the Roblox company.
Kat Bailey is IGN’s Information Director in addition to co-host of Nintendo Voice Chat. Have a tip? Ship her a DM at @the_katbot.
