Roblox Corp. has come out swinging against allegations made by Hindenburg Research, a well-known activist short-seller, that its user metrics are artificially inflated. Hindenburg’s report, released recently, alleges that Roblox has drastically overstated its key performance indicators, including daily active users (DAUs) and playtime, claiming that a significant portion of these numbers are attributed to bot activity.
Roblox, in a statement, vehemently denies these claims, calling them “misleading” and attributing the accusations to Hindenburg’s “agenda” as a short-seller. Activist short-selling, a controversial trading practice, involves investors betting on a stock’s decline. These groups often publish negative reports about companies, aiming to pressure management and drive down share prices. Once the stock price falls, they can profit by buying shares at a lower price and shorting them, meaning they sell borrowed shares with the hope of buying them back at a lower price later.
Roblox’s statement emphasizes its transparency regarding its user metrics, clarifying how it calculates DAUs and other key performance indicators. The company notes that these calculations are publicly disclosed in its quarterly SEC filings (Form 10-K). While acknowledging the existence of bots, Roblox asserts that it takes proactive measures to detect and remove them from its platform and from its reported metrics.
The debate between Roblox and Hindenburg Research raises concerns about the reliability of reported user metrics, particularly in the gaming industry, where bot activity can be used to manipulate perceived popularity and engagement. The allegations have sparked significant interest from investors and the public, highlighting the importance of transparency and accurate reporting in the tech sector.
