Hindenburg Research, the company that accused Adani Group, has now 'charged' this gaming company

Roblox, the popular online gaming platform, is facing allegations of misleading investors about its user base. A new report from investment firm Hindenburg Research claims that Roblox has been consistently overstating the number of people using its platform by up to 42%. Hindenburg is an activist short-selling company that in January 2023 this year accused Adani Group of improper use of offshore tax havens and stock manipulation that sparked a $150 billion rout in shares of the group's companies.

In Roblox's case, Hindenburg's report alleges that Roblox is intentionally conflating actual people with daily users by including alt accounts and bots in its user count. Hindenburg Research claims that Roblox can differentiate between alt accounts and single users but chooses not to, despite stating that daily active users are not a measure of unique individuals.

To support its claims, Hindenburg hired a technical consultant to monitor the top 7,200 Roblox games. The analysis found that the average daily engagement for unique users was significantly lower than what Roblox had reported. Additionally, the report identified numerous "zombie" engagement hours caused by bot accounts, which could skew Roblox's reported average engagement.

The report also raised concerns about Roblox's efforts to protect children on the platform. Hindenburg's researchers created multiple fake accounts as children and found that they were quickly exposed to sexually explicit content.

What Roblox said on Hindenburg Research report

Roblox has strongly denied the allegations, calling them "simply misleading" and claiming that Hindenburg's agenda is driven by its short selling position. The company's shares dropped following the release of the report.

“We totally reject the claims made in the report,” Desiree Fish, Roblox’s chief communications officer, said in a statement to The Verge. “The financial claims made by Hindenburg Research are simply misleading. The authors are, admittedly short sellers and have an agenda irrespective of the substance of Roblox’s business model and results.”