Hindenburg Research claims Roblox inflated user metrics, shares drop 7.5%

Hindenburg Research revealed a short position in Roblox on Tuesday, claiming the gaming platform inflated key metrics. The New York-based short seller claimed that the videogame company has been lying to investors and regulators about the number of users on its platform as well.

This led to a 7.5 percent decline in its shares during premarket trading, reported Reuters. Moreover, Roblox did not immediately respond to news agency's requests for a comment.

What are Hindenburg's concerns about Roblox?

Hindenburg has alleged that Roblox insiders have sold approximately $1.7 billion in stock since the company's direct listing in 2021, with around $150 million in stock sold over the past 12 months alone.


In the last year, three senior executives have resigned, including the company's CFO, who had been with Roblox since 2018, which Hindenburg Research noted as a "red flag."

The investment research firm further claimed that Roblox has misrepresented the number of users on its platform, with their findings suggesting that the company has overstated its metric by 25 percents to 42 percent or more. Additionally, the short-seller suspect that another engagement hours, another key metric, may be inflated by over 100 percent.

The Hindenburg report criticised Roblox for conflating "people" with its daily active users (DAUs), pointing out that the company's definition of DAUs does not reflect "unique individuals accessing Roblox." Hindenburg noted that the DAU figure could include bots or alternate accounts, making it an unreliable indicator of actual user numbers.

"In other words, when Roblox says 'people' it does not actually mean people," the report stated. According to data tracker RoMonitor, there are approximately 6.5 billion registered Roblox accounts, a figure approaching the Earth's population. This clearly indicates that numerous "alt" and/or bot accounts are included in Roblox's metrics; it is simply a matter of determining how many, the Hindenburg report further noted.