A new report from Hindenburg Research alleges that Roblox Corp. has significantly inflated its daily active user (DAU) figures and engagement hours, potentially misleading investors and advertisers. The report also highlights concerns about child exploitation on the platform.
Hindenburg’s analysis suggests Roblox has overstated its DAUs by 25-42% or more and engagement hours by approximately 100%. This discrepancy stems from Roblox’s alleged failure to account for bot accounts and alternate accounts created by users. Many players create alt accounts to protect their main profiles from compromise, a common practice in online gaming. Hindenburg argues that Roblox conflates “daily active user” with “person,” creating a misleading impression of its user base. The research firm cites RoMonitor, an independent Roblox data monitor, which indicates a staggering 6.5 billion registered Roblox accounts, a figure approaching the global population. While Roblox claims it cannot differentiate between main and alt accounts (a process called “de-alting”), Hindenburg’s sources, including former Roblox employees, contradict this assertion. The report further alleges that Roblox utilizes a separate team to present potentially inflated numbers to investors.
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The report underscores Roblox’s financial performance, noting consistent net losses every quarter since going public. The company appears to rely heavily on its reported user growth to appease investors. In September, CEO David Baszucki announced a target of 300 million DAUs, a significant increase from the currently reported 79.5 million. This announcement coincided with the unveiling of new features, including options for creators to sell physical merchandise and an affiliate program designed to attract new users.
Beyond inflated user numbers, Hindenburg’s report also raises serious concerns about child safety on the platform. Roblox, a free-to-use platform with no minimum age requirement, employs a rating system for its games and experiences, including an all-ages category with no restrictions. However, the report details numerous instances of alleged child abuse and exploitation on the platform. These concerns echo previous reports, including a recent Bloomberg article highlighting Roblox’s ongoing struggles with child safety.
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While Roblox offers many legitimate games and experiences, and has collaborated with brands like Ikea and Fandango, the report identifies several games with inappropriate names, including those referencing convicted sex offender Jeffrey Epstein and alleged abuser Sean Combs. This raises questions about the platform’s content moderation practices.
Hindenburg Research, known for its activist approach to financial research, has a history of exposing questionable corporate practices. The firm gained prominence for its 2020 report on Nikola, a company that falsely claimed to have developed a zero-emission semi-truck. The Nikola CEO was subsequently sentenced to prison for fraud.
This latest report casts a shadow over Roblox’s future, raising questions about its user metrics, financial viability, and commitment to child safety.
