Representative image. Photo: Bloomberg
Hindenburg Research disclosed a short position in Roblox on Tuesday, alleging that the gaming platform popular among young children inflated metrics including user numbers.
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.
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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.
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Roblox did not immediately respond to a request for comment.
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It is the latest target of Hindenburg, whose reports have knocked shares of companies owned by billionaire-investor Carl Icahn and India’s Gautam Adani.
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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.
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“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.
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“We also show how engagement hours, another key metric, is inflated by an estimated 100%+.”
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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.
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The company raised its annual bookings forecast in August as it benefits from strong spending on the various games available on the platform.
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It had 79.5 million DAUs, as of its second quarter ended June 30.
First Published: Oct 08 2024 | 7:51 PM IST
