Roblox Accused of Lying To Investors About User Numbers (theverge.com) 16
Investment firm Hindenburg Research claims Roblox is "consistently overstating the amount of people on its platform by 25 percent to 42 percent or more." The Verge reports: Roblox, which went public in 2021, reported having 79.5 million daily active users in its most recent earnings report. However, Hindenburg claims Roblox "intentionally conflates" actual people with daily users, as that number could also include alt accounts and bots. The research alleges that Roblox can separate alt accounts from single users, even though the company's disclosure says daily active users "are not a measure of unique individuals accessing Roblox."
Hindenburg is an activist short-selling firm that infamously publishes research when it says it's identified something shady about a business, allowing it to make a profit as its share value declines. One example is from 2020, when Hindenburg accused the EV startup Nikola of fraud. Subsequently, an investigation by the Securities and Exchange Commission (SEC) resulted in a four-year prison sentence for its founder, Trevor Milton. [...] The firm also claims Roblox isn't doing enough to protect children on the platform, alleging its "in-game research revealed an X-rated pedophile hellscape, exposing children to grooming, pornography, violent content and extremely abusive speech." Roblox shares dipped following the release of the report. Desiree Fish, Roblox's chief communications officer, said in a statement: "We totally reject the claims made in the report. The financial claims made by Hindenburg Research are simply misleading. The authors are, admittedly short sellers and have an agenda irrespective of the substance of Roblox's business model and results. Over the past four quarters our bookings, the amount of cash receipts, have grown over 22% from $780.7 million in Q2 2023 to $955.2 million in Q2 2024. Over the same time, cash provided by operating activities have totaled $646.3 million, free cash flow was $440.3 million, and we have guided to even higher numbers for fiscal 2024. An examination of our GAAP balance sheet and our GAAP cash flow statement makes that clear. The focus on cash bookings and cash flow are themes that we have focused on consistently with investors dating back to our days as a private company. The author made no attempt to highlight any of that because the positive facts simply don't support their agenda."
Hindenburg is an activist short-selling firm that infamously publishes research when it says it's identified something shady about a business, allowing it to make a profit as its share value declines. One example is from 2020, when Hindenburg accused the EV startup Nikola of fraud. Subsequently, an investigation by the Securities and Exchange Commission (SEC) resulted in a four-year prison sentence for its founder, Trevor Milton. [...] The firm also claims Roblox isn't doing enough to protect children on the platform, alleging its "in-game research revealed an X-rated pedophile hellscape, exposing children to grooming, pornography, violent content and extremely abusive speech." Roblox shares dipped following the release of the report. Desiree Fish, Roblox's chief communications officer, said in a statement: "We totally reject the claims made in the report. The financial claims made by Hindenburg Research are simply misleading. The authors are, admittedly short sellers and have an agenda irrespective of the substance of Roblox's business model and results. Over the past four quarters our bookings, the amount of cash receipts, have grown over 22% from $780.7 million in Q2 2023 to $955.2 million in Q2 2024. Over the same time, cash provided by operating activities have totaled $646.3 million, free cash flow was $440.3 million, and we have guided to even higher numbers for fiscal 2024. An examination of our GAAP balance sheet and our GAAP cash flow statement makes that clear. The focus on cash bookings and cash flow are themes that we have focused on consistently with investors dating back to our days as a private company. The author made no attempt to highlight any of that because the positive facts simply don't support their agenda."
Good (Score:2, Informative)
Re: (Score:1)
(You) made no attempt to highlight any of that because the positive facts simply don't support {your) agenda.
happened before many times (Score:5, Interesting)
Reminds me of what a company called Computer Associates did in the late 90s. Back in 1998, their share price was dropping because they weren't showing revenue growth, the execs either convinced themselves it was temporary or wanted an immediate boost. So they had idea to report 3.1 months of revenue as being 3 months of revenue (hoping to "fix" it next quarter) .. of course next quarter they didn't have enough revenue to cover that and were also afraid of looking bad to their investors so they made that quarter be 3.2 months, and so on.. and they kept getting greedier and greedier until one day a couple of years later they reported revenue over 50% beyond what made any sense and finally attracted the SEC's attention. Reference: https://knowledge.wharton.upen... [upenn.edu]
Re: (Score:1)
Re: (Score:2)
Reminds me of what a company called Computer Associates did in the late 90s. Back in 1998, their share price was dropping because they weren't showing revenue growth, the execs either convinced themselves it was temporary or wanted an immediate boost. So they had idea to report 3.1 months of revenue as being 3 months of revenue (hoping to "fix" it next quarter) .. of course next quarter they didn't have enough revenue to cover that and were also afraid of looking bad to their investors so they made that quarter be 3.2 months, and so on.. and they kept getting greedier and greedier until one day a couple of years later they reported revenue over 50% beyond what made any sense and finally attracted the SEC's attention. Reference: https://knowledge.wharton.upen... [upenn.edu]
I never had to deal directly with Computer Associates, yet the name rings throughout my contact list as an instant anti-good vibe. Everybody seems to have a story about what a pile of dog-shit it was at every level, yet somehow they actually survived for a bit there. Amazing.
Why should they lie (Score:3)
> the company's disclosure says daily active users "are not a measure of unique individuals accessing Roblox."
They state what the number means correctly. Maybe they can separate individuals and "users", but as long as they do not even claim that the number counts individuals, they are not lying.
Family Size. (Score:2)
Re:Family Size. (Score:4, Insightful)
Roblox has about the same standards as any other website with regards to account signup. You fill out a form and put in a password and/or 2FA source. Why should it be any harder than that?
Regarding purposes to create a new account, they include:
1) Wanting to not show that you play games popular with another gender.
2) Testing games that you don't want to show up on your continue list.
3) Different friend groups
4) Noob to godly replays in older adventure games that do not support multiple character starts
5) Developing on the platform from a stealth account
6) You lost your password and didn't set up a recovery email
And oh so many others...
I so want to short squeeze them (Score:2)
Companies like this need to have their short positions demolished. This past year has been awful for game developers. I hate these "research" short sellers who put out "news" that's wrong in an effort to make some money. The SEC should investigate these people, but much better would be if everyone bought up Roblox to $50+ put these people out of business.
Re: (Score:2)
Re: (Score:2)
Reporting on companies defrauding their investors if true is not a bad thing, but taking out a large put position and _then_ claiming all the bad things about the company that are reported all at once, that's sus as hell. That sounds a lot like fraud.
Re: (Score:2)
Reporting on companies defrauding their investors if true is not a bad thing, but taking out a large put position and _then_ claiming all the bad things about the company that are reported all at once, that's sus as hell. That sounds a lot like fraud.
I got a big secret for you. Pretty sure it's one of those, "Everybody knows, but nobody talks about it." Our entire economy is built on fraud. The trick is playing the fraud game just enough to make bank, but not enough to attract bad attention. Or playing it so well you can afford to pay the "bad attention" to accidentally not notice. Look at how much of Wall Street is driven by pure fantasy and speculation, rather than actual value. We're playing make believe with an entire make believe concept (money), t
Another banger from the gang over at Hindenberg... (Score:2)
On March 23, 2023 they released a similar report about CashApp/Block. Fraud. Fake accounts. Misleading investors. Damn near identical accusations to the Roblox report (except the creepy child labor part). Less then two weeks later one of the CashApp founders, a guy who would have been in a position to know where all the bodies were buried, was murdered by another "tech worker".
I hope some
Don't dismiss HR (Score:2)
Here's a graphic on their track record [reddit.com]. They're not a "short and distort" fund. They tend to be pretty solid at finding companies engaged in shenanigans.
I would hazard a guess that the CSAM/predator angle was deeply researched because Roblox could utterly bankrupt them under even US defamation laws since unbacked accusations of sexual misconduct firmly fall outside 1A protections.
ROBLOX might be right (Score:2)
So the cash flow sounds accurate. Nobody wants to trash a profitable company.
I monitor my duaghter as much as possible. I disabled the microphone to be used by Roblox and most of the activity looks very harmless.
I we've created two accounts so far.
But it's easy to believe short sellers are bias and want to bring the stock price down to make a profit (instead of reporting child abuse to authorities).