Roblox co-founder and CEO David Baszucki (Getty Images)

Bloxxed

Roblox tumbles on short seller’s scathing report

Noted short seller Hindenburg Research alleged in a report that the company inflated user metrics. It also called the online gaming platform a “pedophile hellscape” and attacked its committment to user safety.

Matt Phillips

10/8/24 11:57AM

Online gaming platform Roblox face-planted on Tuesday, after short seller Hindenburg Research published a searing report alleging that the company “is lying to investors, regulators, and advertisers about the number of ‘people’ on its platform.”

Hindenburg — which has made some good calls lately, like its short position on SuperMicro, which is down more than 50% over the last six months, and last year’s report on Icahn Enterprises — also spotlights the sensitive area of user safety. Citing an interview with an anonymous “former senior product designer,” Hindenburg writes that “Roblox is compromising child safety in order to report growth to investors.”

Roblox disputed Hindenburg’s statements.

“We totally reject the claims made in the report. The financial claims made by Hindenburg Research are simply misleading,” Stefanie Notaney, a spokeswoman for the company, wrote in a statement to Sherwood, later adding, “We firmly believe that Roblox is a safe and secure platform and in the financial metrics we report.”

The Hindenburg report, however, adds to the pressure that has been building on the company, which has never notched a profit as a public entity. That’s part of the reason the stock has been on a long downward slide for most of the time since it began trading.

Jobs or GPUs?

Matt Phillips

Max Knoblauch3h

A former karaoke machine company has obliterated billions of dollars in trucking market cap

Trucking industry stocks are getting gutted on Thursday, with shares of freight companies like C.H. Robinson and Expediators International sinking by double digits.

Fears that AI will disrupt the freight forwarding and brokerage industry appear to be driving the sell-off. A white paper published by Algorhythm Holdings — a company that previously produced consumer karaoke products and also owns 80% of AI logistics company SemiCab — said that its SemiCab AI platform lets customers scale freight volumes by 300% to 400%. Sherwood News was unable to access the paper.

Algorhythm shares are up more than 30%, while major trucking stocks like JB Hunt and Old Dominion Freight are firmly in the red.

The market reaction mirrors last week’s AI-led sell-off in software stocks, and the similar recent sell-off seen in gaming companies following Google’s launch of its Project Genie AI tool.

Luke Kawa3h

Options trades to play for a short squeeze in Hims & Hers as the pain piles up

Hims & Hers has been clobbered over the past week as the telehealth company stepped back from plans to sell a copycat version of Novo Nordisk’s weight-loss pill and then faced a lawsuit from the Danish pharma titan.

In these troubled times for the company, the haters are out in full force.

“HIMS is down -48% over the last month, and yet short interest continues to increase (and accelerate), suggesting hedge funds are pressing their shorts, even though shares are approaching 2Y lows (RSI is just 15),” wrote Dean Curnutt, CEO of Macro Risk Advisors. “With earnings on 2/23, this potentially sets up for a nasty short covering/squeeze event, especially since HIMS usually sees strong post-earnings follow-through.”

Should some be tempted to catch a falling knife in the once loved stock, he offers a pair of risk-defined ways to do so via call spreads.

Curnutt’s recommendations:

Buy calls on Hims with a strike price of $20 that expire on March 20; sell same amount of $30 strike calls with the same expiry.
Buy calls on Hims with a strike price of $22 that expire on March 20; sell same amount of $28 strike calls with the same expiry.

“There is also a lot of upside call skew in Mar expiry, and this allows us to set up call spreads with extremely attractive breakevens and payouts,” Curnutt wrote.

Max Knoblauch5h

Boeing touts supply chain improvements, progress in its “war on defects”

Boeing shares are climbing on Thursday, following comments made by one of the plane maker’s executives at a supplier conference on Wednesday evening.

The company says it’s now spending 40% fewer hours fixing issues arising from its supply chain compared to 2024 — a year marred by production and quality issues.

Defects from parts of the chain controlled by Spirit AeroSystems — a fuselage supplier Boeing acquired last year — have dropped by 60% from 2024.

The progress update comes amid the company’s self-declared “war on defects.” Following its 2024 door plug blowout incident, Boeing has worked to improve documentation, simplify instructions, and expand employee training. According to the National Transportation Safety Board, the share of Boeing employees with 10 or more years of experience halved from 50% to 25% over the past decade.

Boeing sees significant supply chain quality gains

Defects from parts of the chain controlled by Spirit AeroSystems — a fuselage supplier Boeing acquired last year — have dropped by 60% from 2024.

Luke Kawa & Tom Jones6h

Crocs surges as Q4 results and 2026 earnings guidance exceed every analyst’s projections

Shares of Crocs are up double digits in premarket trading after the footwear maker posted Q4 sales and adjusted earnings per share that exceeded every analyst’s estimates.

The company reported revenues of $957.6 million and adjusted EPS of $2.29 in Q4, trouncing expectations for $916.9 million and $1.92, respectively.

Guidance was similarly stellar:

Management called for adjusted EPS to come in between $12.88 and $13.35; the highest estimate from the 13 analysts polled by Bloomberg was just $12.62, and the average was $12.02.

Full-year sales are projected to be down about 1% to up slightly, while Wall Street had also penciled in a bigger decline.

Crocs will struggle to be in s̶p̶o̶r̶t̶ growth mode this year on the top line because it’s carrying around the anchor that is the HeyDude brand.

Even a fresh marketing effort with Sydney Sweeney unveiled in late September didn’t boost HeyDude, in stark contrast to what American Eagle’s partnership with the actress has done to demand for its denim.

The brand’s quarterly sales were down 17% year on year. All of the drop came from wholesale demand, which tumbled 40.5%, while direct-to-consumer sales were flat.

Management expects HeyDude revenues to be down another 7% to 9% this year.