Roblox Faces Accusations of Deceiving Investors Regarding Its User Numbers.

Roblox is facing serious accusations of allegedly deceiving its investors about the number of active users on its platform. A recent report from an investment firm claims that the company has been "consistently overstating the number of users on its platform by 25% to 42% or even more."

Since going public in 2021, Roblox has reported having 79.5 million daily active users in its latest financial report. However, the research firm alleges that the company "intentionally mixes" the number of unique users with daily users, as this figure could include alternate accounts and bots. Additionally, it is claimed that Roblox has the ability to distinguish between alternate accounts and unique users, despite its own disclosure stating that daily active users "are not a measure of unique individuals accessing Roblox."

Hindenburg Research, known for its activist short-selling approach, has made accusations in the past, including an investigation into the electric vehicle company Nikola, which led to a prison sentence for its founder in 2021.

Desiree Fish, Roblox's communications director, responded to the allegations by stating, "We completely reject the claims made in the report. Hindenburg Research’s financial assertions are simply misleading." In its defense, Roblox highlighted that its revenue has grown by 22% over the past year, along with other financial metrics that demonstrate the strength of its business model.

In addition to the accusations regarding inflated user figures, the report also points out that the platform is not doing enough to protect children. Hindenburg claims to have identified a risk environment in which children could be exposed to dangerous situations such as bullying and pornography. In response, a spokesperson for Roblox denied that child abuse is a widespread problem on its platform, stating that the company continually updates its safety practices to prevent malicious activities.

The situation has negatively impacted Roblox's stock value following the publication of the report, raising concerns about the well-being of minors on the platform.