Hindenburg Research discloses short position on gaming company Roblox. Shares plunge 9%

Popular gaming platform Roblox is the latest target of American short seller Hindenburg Research which has alleged that the company inflated metrics including user numbers.

Following the report, Roblox shares fell 9.2% in early trading after the short seller said the company conflated daily active users (DAUs) with the number of people visiting its platform.

The American short seller has shared its research report on its official X handle while saying that "Roblox—Inflated Key Metrics For Wall Street". It has also referred to the company as a 'A Pedophile Hellscape For Kids'.



This was based on its definition that the metric is not a measure of "unique individuals accessing Roblox", Hindenburg said, adding that DAUs could include bots or alternate accounts. The short seller said it has also found multiple instances of bots from different countries that use alternate accounts to "farm" for goods in games on Roblox.

"Roblox is lying to investors, regulators, and advertisers about the number of "people" on its platform, inflating the key metric by 25-42%+," Hindenburg said.

"We also show how engagement hours, another key metric, is inflated by an estimated 100%+."

Roblox makes most of its money from in-game spending on its virtual currency, Robux, which is used to purchase cosmetic items within the game.

The company raised its annual bookings forecast in August as it benefits from strong spending on the various games available on the platform.

It had 79.5 million DAUs, as of its second quarter ended June 30.

Roblox did not immediately respond to a request for comment.

Hindenburg's has previously published a report on Indian billionaire businessman Gautam Adani and his Group, alleging stock manipulation and accounting fraud practices.

This year, Hindenburg Research was back in news with a fresh set of allegations flying, though this time around, Securities and Exchange Board of India (Sebi) and its Chief Madhabi Puri Buch are at the receiving end. Following the report, Buch and her husband Dhaval Buch have issued a joint statement which is followed by a statement from the regulator.

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