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.
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.
