A player wakes up in the game’s classic release in Roblox (2006), Roblox Corporation
Cue ‘Roblox_Oof.mp3’ – Roblox has offered an official response after a recent report accused the popular online kids game of both falsifying its user metrics to investors and fully enabling child predators to stalk the platform.

A player finds himself the target in Roblox (2006), Roblox Corporation
Assembled by the U.S.-based investment firm Hindenburg Research and published on October 8th based on both publicly available information and their own first-hand investigations, the report in question claimed that Roblox was currently plagued by two major problems.

The first, said the firm, was “that Roblox is lying to investors, regulators, and advertisers about the number of ‘people’ on its platform,” as while “the company’s reported number of “people” [visitors] regularly matches Roblox’s reported Daily Active Users (DAUs), said DAUs, per the site’s own terms, “are not a measure of unique individuals accessing Roblox’ because they can include numerous accounts run by a single person, such as alternate or bot accounts.
The original incarnation of Roblox returns in Roblox (2006), Roblox Corporation
“Given these definitions, we believe Roblox intentionally conflates ‘people’ with DAUs, consistently inflating the reported number of people on its platform,” said Hindenburg Research. “Multiple former employees told us that Roblox does internally track single users with multiple accounts, referring to the process as ‘de-alting’. Interviews reveal Roblox effectively has two sets of books for counting users: one for internal business decisions, in which multiple accounts are ‘de-alted’, and one used by the finance team that reports higher metrics to investors.”

Further, as part of this ‘book cooking’, the firm believes that Roblox is “massively inflat[ing] a second key metric,
‘engagement hours’.”

“To better understand the company’s reported engagement, we hired a technical consultant that monitored the top ~7,200 Roblox games across ~2.1 million Roblox servers, collecting 297.7 million rows of real-time player data,” they detailed. “The data suggests that Roblox could be massively overstating the true level of user engagement across its platform: our review of an average of 30.4 million unique daily users found they spent just ~22 minutes in games per day. Further analysis of play times showed numerous games in which obvious bot accounts remained in-game for more than 24 hours straight. Our representative sample flagged millions of ‘zombie’ engagement hours that can majorly skew Roblox’s reported ‘average’ engagement.”
A legally-distinct ‘Hulk’ emerges in Roblox (2006), Roblox Corporation
The second major issue, according to Hindenburg Research, is that the firm’s “in-game research revealed an X-rated pedophile hellscape, exposing children to grooming, pornography, violent content and extremely abusive speech.”

“Roblox is compromising child safety in order to report growth to investors,” they accused, “[as] per our interview with a former senior product designer: “If you’re limiting users’ engagement, it’s hurting your metrics…in a lot of cases, the leadership doesn’t want that.”

“Core to the problem is that Roblox’s social media features allow pedophiles to efficiently target hundreds of children, with no up-front screening to prevent them from joining the platform,” the firm added.

In support of their accusation, Hindenburg Research cited how the platform allowed multiple user names referencing convicted child abusers Jeffrey Epstein and Earl Brian Bradley, hosted such user-created games as ‘Run From Diddy Simulator’, and provided easy access to groups wherein members were allegedly “openly soliciting sexual favors and trading child pornography.”

“Despite Roblox’s claims of ‘best in the world’ content moderation, our interviews with moderators show safety was largely outsourced to Asian call centers,” the firm detailed. “Moderators described being paid $12 a day to review countless instances of child grooming and bullying with a limited ability to keep perpetrators off the platform permanently.”

A player prepares to liberate a hostage in Roblox (2006), Roblox Corporation
Drawing their report to a close, the firm ultimately declared, “As noted earlier, we suspect these metrics are wildly inflated and that the platform poses major reputational risks for advertisers.”

“For instance, we found Instagram ads in the same school simulator game with Nazi hate speech and photos of male genitalia,” they said. “Overall, we think Roblox has adopted the Silicon Valley approach of ‘growth at all costs’, whether by misleading or outright lying to investors about its key metrics or by opening its platform to dangerous predators and illicit content unsuitable for children.”

Notably, far from being the result of an entirely altruistic endeavor, Hindenburg Research’s report does end with the disclaimer that “after extensive research, we have taken a short position [wherein a fall in stock price would result in profit for the investor] in shares of Roblox Corporation”.
A group of players bust some moves in Roblox (2006), Roblox Corporation
Following the publication of Hindenburg Research’s report, Roblox issued an official response via a statement shared to the Investor Relations section of their website, declaring “Roblox rejects the claims made in the Hindenburg Report.”

“Safety and civility have been foundational to Roblox since the company’s inception nearly two decades ago, and the company has invested heavily throughout its history in its Trust & Safety efforts,” the company spokesperson continued. “Every day, tens of millions of users of all ages have safe and positive experiences on Roblox, abiding by the company’s Community Standards. Roblox takes any content or behavior on the platform that doesn’t abide by its standards extremely seriously, and Roblox has a robust set of proactive and preventative safety measures designed to catch and prevent malicious or harmful activity on the platform. For more information about Roblox’s safety efforts, see this most recent blog post.”

“The financial claims made by Hindenburg are misleading,” they continued. “The authors are short sellers and have an agenda irrespective of the substance of Roblox’s business model and results. Roblox’s topline is growing quickly. Bookings grew over 22% to $955.2 million in Q2 2024 (the most recent publicly reported quarter) up from $780.7 million in Q2 2023. Over the last four quarters, cash provided by operating activities have totaled $646.3 million and free cash flow was $440.3 million. An examination of Roblox’s GAAP balance sheet and GAAP cash flow statement makes that clear. The focus on cash bookings and cash flow are themes that the company has focused on consistently with investors dating back to when it was a private company. The authors made no attempt to highlight any of that because the positive facts simply don’t support their agenda.”
A player takes his trusty frying pan into battle in Roblox (2006), Roblox Corporation
“The authors neglected to accurately report on the company’s public disclosures,” the company refuted. “Roblox takes its reporting obligations seriously. Since Roblox’s initial public filing the company has included a Special Note Regarding Operating Metrics that explains how the company’s key operating metrics (including DAUs, hours, and bookings) are calculated.”

Drawing their repsonse to a close, Roblox ultimately declared that they were “look[ing] forward to discussing its most recent financial results and answering any questions on the company’s third quarter earnings call on October 31, 2024.”