Roblox is ‘pedophile hellscape’ and unsafe for kids, says missing seller

The short seller, who revealed a bet against the public company, claimed that Roblox inflated the number of people visiting its platform by 25% to 42% and likely overestimated the number of hours of engagement users had spent on the site more than twice. Shares of Roblox fell 2.13% on the news to around $40.51 on Tuesday afternoon.

In a 2022 quarterly earnings report, Roblox claimed that 54.1 million “people” visited its site daily to create their own games or play those created by others. However, Hindenburg claims that Roblox equated “people” with the much more nuanced figure “daily active users,” which can include bots and people with multiple accounts.

By Roblox’s own disclosures, daily active users “are not a measure of unique people accessing Roblox,” the retailer wrote in a brief in a report Tuesday. Former employees told the short seller that the company essentially has two numbers for users, one for internal use that filters out bots and multiple accounts linked to a person, and one for external publication that exaggerates user numbers by including those items.

Hindenburg also said that Roblox may be exaggerating its “engagement hours” figure. A consultant’s assessment of an average of 30.4 million daily users for Hindenburg found that users spent about 22 minutes a day playing games. Meanwhile, as recently as 2023, the company reported an average of 2.4 hours of engagement time per day per user.

“We totally reject the claims made in the report. The financial claims made by Hindenburg Research are simply misleading. Authors are of course short sellers and have an agenda regardless of the substance of Roblox’s business model and results,” a Roblox spokesperson said in a statement to wealth.

Another claim by the missing seller was that minor users are generally targeted, amounting to “a pedophile hell for children”. The authors claim that the site’s social media features “allow pedophiles to effectively target hundreds of children without being vetted beforehand to prevent them from joining the platform.”

Roblox’s response is an abject failure to address the two main allegations in our report, including:

1. Proof that Roblox has systematically lied for years about the number of people on its platform and their actual level of engagement.

2. That the platform is a… pic.twitter.com/Tj2KiANOnI

— Hindenburg Research (@HindenburgRes) October 8, 2024

The authors found 38 groups on the platform where users traded child pornography and solicited sexual favors, according to the report. Several other inappropriate games and experiences related to convicted sex trafficker Jeffrey Epstein and accused sex trafficker Sean “Diddy” Combs were also available to perpetrators, even when they created an account listing their age as under 13 years. The site’s safety monitoring is largely outsourced to employees in Asia who are paid $12 a day and are limited in what they can do to permanently ban offending users, the missing vendor claimed.

“We believe Roblox has adopted the Silicon Valley approach of ‘growth at any cost,’ either by deceiving or lying to investors about its core values, or by opening up the platform to dangerous predators and illicit content not suitable for children,” he wrote Hindenburg in publication. report.

In addition to allegations of inflating user values ​​and a lack of protection for minor users, Hindenburg claimed that the company’s profitability had declined and that it was trying to maintain the appearance of growth by expanding into Asia, even though these users are less profitable than those in the US and Europe.

Roblox said in a statement to wealth that its cash receipts rose 22% from the second quarter of 2023 to the second quarter of this year and led to higher numbers for fiscal 2024.

“We strongly believe that Roblox is a safe and secure platform and in the financial metrics we report,” said a Roblox spokesperson.

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