According to the report, Roblox is exaggerating its user data

A scathing new report on mega-metaverse Roblox alleges that the company “lied to investors, regulators and advertisers,” specifically about the number of active users and the presence of child exploitation and sexual exploitation on the platform.

Hindenburg Research’s analysis is quite worth reading – both in length and content – ​​but the basis is that it believes that Roblox Corp. has inflated its daily active user metrics by about “25-42% or more” and engagement hours by about 100% because it doesn’t take bots or alt accounts into account.

Hindenburg uses the report to show how Roblox merges “daily active user” with “person” in several environments but does not do so in others, such as in SEC filings. Many users create alt accounts so that their main account is not compromised. This is a common practice among many online video games and platforms.

“Independent Roblox data monitor RoMonitor indicates that there are a total of 6.5 billion registered Roblox accounts at the time of writing, a number approaching the population of the Earth,” the report said. While Roblox has said it cannot distinguish between alt accounts and main accounts (a process called “de-alting”), Hindenburg sources, including former Roblox employees, say otherwise. They also add that Roblox is hiring another team to present numbers to investors.

That’s what Hindenburg writes Roblox has reported net losses every quarter since it went public, relying mostly on its growing player base to appease investors. In September, CEO David Baszucki revealed at the Roblox Developers Conference that the company is targeting 300 million daily active users, up from the current reported 79.5 million daily active users. This came along with some big announcements, including new ways for creators to sell physical merchandise, and an affiliate program to reward people for bringing new users to the platform.

Additionally, the report reveals “dozens of abuses” against children using the platform. Roblox is free to use and has no minimum age limit for users, although it does use a rating system for its games and experiences, including an all-ages system with no restrictions. This has already been reported in the past Roblox has many problems in this area, including a recent Bloomberg article that interviewed current and former employees who said the platform has a problem with child safety.

There are a lot of games to play on Roblox that offer completely normal gameplay, and many well-known brands such as Ikea and Fandango have used the platform to promote so-called ‘experiences’. However, the report names many games that are unsuitable for a platform with children, including games named after sex trafficker Jeffrey Epstein and alleged sexual abuser Sean Combs.

Hindenburg is an activist financial research firm that specializes in calling out companies and startups for exploitative and distrustful behavior. It’s probably best known for a 2020 report against Nikola, a company that claimed to have created a zero-emission semi-truck and was on its way to inking a deal with General Motors. A few years later, Nikola’s CEO was sentenced to four years in prison for lying about “almost all aspects of the company.”