Roblox Under Fire: Inflated Metrics and Failing Kids’ Safety, Claims Report

Popular online game platform and game creation system Roblox may have been severely misleading investors about key statistics such as user and engagement numbers, according to a scathing report from investment research firm Hindenburg.

Our research indicates that Roblox is lying to investors, regulators, and advertisers about the number of “people” on its platform, inflating the key metric by 25-42%+. We also show how engagement hours, another key metric, is inflated by an estimated 100%+.

According to Hindenburg Research, the $27 billion USD public company reports its Daily Active Users (DAUs) as “people” who visit its platform every day. However, by Roblox’s admission, DAUs “are not a measure of unique individuals accessing Roblox” as they do not exclude bot accounts and multiple accounts belonging to the same user.

“We believe Roblox intentionally conflates “people” with DAUs, consistently inflating the reported number of people on its platform,” said Hindenburg Research.

The forensic financial research institution also suspects Roblox of heavily overstating its engagement numbers. Roblox reported an average daily engagement time of 2.4 hours per user in 2023 — 58% higher than the average time spent by 8-12-year-olds in the U.S. playing all mobile games.

“The data suggests that Roblox could be massively overstating the true level of user engagement across its platform: our review of an average of 30.4 million unique daily users found they spent just ~22 minutes in games per day,” said Hindenburg Research. Bot accounts used for “farming” in-game items are rampant on the platform, and could play a major role in artificially boosting engagement numbers.

Roblox has reported net losses every quarter since going public. As such, the company’s stock price rests entirely on the growth its reported usage metrics demonstrate to the market. However, Hindenburg’s report suggests that striving for this growth may be turning the platform into a “hellscape” for kids.

“Beyond inflated key user metrics, our in-game research revealed an X-rated pedophile hellscape, exposing children to grooming, pornography, violent content and extremely abusive speech,” the research firm noted.

“Roblox is compromising child safety in order to report growth to investors, per our interview with a former senior product designer: “If you’re limiting users’ engagement, it’s hurting your metrics…in a lot of cases, the leadership doesn’t want that.”

Alongside the release of its report, Hindenburg has taken a short position on Roblox shares. Roblox isn’t the first company Hindenburg has targeted in its exposé-style reports, with previous victims including the likes of server-maker Super Micro Computer and electric vehicle startup Nikola. Every company Hindenburg has reported on so far has seen its stock price take a significant hit.