New Delhi: In a scathing report, Hindenburg Research, a renowned short seller, has accused Roblox Corporation, a popular online gaming platform, of deceiving investors and regulators about its user base. This bombshell revelation sent Roblox's shares tumbling in pre-market trading on October 8.
Unmasking the Truth
Hindenburg Research's explosive allegations claim that Roblox has artificially inflated its user metrics by 25-42% and engagement hours by over 100%. The short seller asserts that the company's definition of daily active users (DAUs) is misleading, as it conflates "people" with DAUs, which may include bots or alternate accounts.
Roblox's Controversial Metrics
Roblox's DAU metric has been a subject of controversy, as it doesn't accurately represent unique individuals accessing the platform. The company's own definition states that DAUs are not a measure of "unique individuals accessing Roblox." This ambiguity raises questions about the platform's actual user base.
Strong Bookings, But at What Cost?
Despite the allegations, Roblox's second-quarter bookings surpassed estimates, driven by summer holidays in the US, which typically see increased gaming activity. The company also raised its annual bookings forecast in August, citing robust spending on its platform.
Hindenburg's Findings
Key takeaways from Hindenburg Research's report:
1. Inflated user metrics: 25-42% overstatement
2. Engagement hours inflated by over 100%
3. Misleading DAU definition
4. Potential inclusion of bots or alternate accounts in DAU count
Market Reaction
Roblox's shares plummeted in pre-market trading on October 8, reflecting investor concerns about the company's transparency and accountability.