Roblox refutes Hindenburg’s research report on inflated statistics

Roblox says claims in a recent research report are “misleading.” The report from Hindenburg Research claims that Roblox vastly inflates the statistics it shares with investors, while doing very little to combat child exploitation on its platform.

Hindenburg Research is a US-based investment research firm involved in activist short selling. The report says that Roblox is not a profitable company and that its stock price depends on the growth numbers it presents to Wall Street. The company believes that Roblox has inflated these metrics, including audience size and engagement hours. It also investigated allegations that children (under the age of 13) access pornography and chat rooms where they have the potential to be groomed by predators.

The report claims that Roblox’s measure of how many people use its platform does not reflect the actual number of daily active users. That’s because people can have multiple accounts, including bot accounts. The report suggests that Roblox increases the number of people using its platform by 25-42% when speaking to investors, regulators and advertisers. Hindenburg Research says it has spoken to former Roblox employees who say the company maintains accurate metrics for internal business decisions, but inflated metrics for investors.

Roblox calls these claims misleading in its statement on the report. “The authors are short sellers and have an agenda regardless of the substance of Roblox’s business model and results.” The company clarified what it calls a daily active user (DAU) as someone who has logged in and visited Roblox through the website or a gaming client on console, mobile or PC.

“If a registered, logged in user visits Roblox more than once within a 24-hour period spanning two calendar days, that user will be counted as a DAU for the first calendar day only,” Roblox says. “We believe this method better reflects global engagement on the platform than a method based purely on a calendar day.”

Hindenburg Research hired a technical consultant to analyze 297.7 million rows of real-time player data across 7,200 Roblox games and 2.1 million Roblox servers. That assessment of approximately 30.4 million unique daily users found that Roblox users spend an average of 22 minutes per day playing Roblox. The research firm says Roblox’s engagement hours metric is inflated by bot accounts that stay online 24 hours at a time. It is also claimed that Roblox encourages the creation of AFK (away-from-keyboard) games to artificially increase engagement hours.

In addition to the alleged exaggerated engagement statistics, Hindenburg Research also looked at the way minors interact with the platform. The report calls Roblox an “X-rated pedophile hell” and says it “exposes children to grooming, pornography, violent content and extremely offensive language.”

A researcher registered a new Roblox account and checked the under 13 box. After logging in, the researcher was able to find and open dozens of groups with hundreds of thousands of users who freely shared child pornography and solicited sexual acts from minors. Chat rooms for these groups have no age restrictions. An interview with former Roblox moderators shows that moderation is largely outsourced to Asian call centers.

The report also accuses the Roblox C-Suite of cashing out after the company went public in 2021. Roblox insiders have sold $1.7 billion worth of stock, and in the last twelve months alone, insiders claim to have sold $150 million worth of stock, of which $115 million was stock. shares sold by CEO David Baszucki.