Hindenburg probe exposes Roblox's dark side

Investment research firm Hindenburg Research has released a damning report alleging that online gaming platform Roblox has engaged in fraudulent practices, inflating key user metrics and compromising child safety.

According to the report, Roblox, a $27 billion company, has reported net losses every quarter since its 2021 direct listing, with total losses reaching $1.07 billion. Despite this, insiders have cashed out $1.7 billion in stock, including $115 million by CEO David Baszucki.

Hindenburg Research claims that Roblox has:

1. Inflated its daily active users (DAUs) by 25-42%, misrepresenting the number of unique individuals on the platform.
2. Failed to account for alternate and bot accounts, despite internal tracking.
3. Overstated engagement hours by 100%, with users spending significantly less time on the platform than reported.
4. Compromised child safety by allowing pedophiles to target children, with inadequate moderation and no up-front screening.

The report highlights disturbing examples of child exploitation, including:

1. Sexually explicit content and grooming.
2. Games promoting violence and hate speech.
3. Easy access to adult content and child pornography.

Hindenburg Research also criticizes Roblox's lack of age verification, allowing children to access mature content, and its failure to remove problematic users and content.

The report concludes that Roblox's prioritization of growth over safety and transparency poses significant reputational risks for advertisers and investors.

Key Findings:

- Roblox's reported DAUs may be inflated by 25-42%.
- Engagement hours may be overstated by 100%.
- Child safety concerns, including exploitation and exposure to mature content.
- Inadequate moderation and lack of up-front screening.
- Insiders have cashed out $1.7 billion in stock despite company losses.

Recommendations:

- Roblox should report accurate, de-alted, and de-botted metrics.
- Improve content moderation and child safety measures.
- Implement robust age verification and up-front screening.

The report raises serious questions about Roblox's business practices and commitment to child safety.