In a new report, short seller Hindenburg Research claims gaming platform Roblox (RBLX) is inflating its user metrics and going so far as to allege an unsafe online environment for younger users. "The reason they think it’s inflated is that they say that each user has the potential to open up many alternate accounts. And people do… I don’t think the vast majority do, but some do. So they’re they’re measuring users and… they might say 79.5 million daily active users when the number, according to Hindenburg, is 22% lower than that," Wedbush managing director of equity research Michael Pachter explains. "So let’s just say 60 million. Who cares? The revenues went up from $2.8 billion to $3.5 billion from ’22 to ’23, and they’re going up again to $4.2 billion this year. Pachter joins the Catalysts team to explore the content of the report, citing Bloomberg’s July investigation into cracking down on predatory behavior, finding Hindenburg’s data to be based on a "shaky, shaky foundation." Yahoo Finance received a response from a Roblox spokesperson after this segment’s airing: "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’ business model and results… We firmly believe that Roblox is a safe and secure platform and in the financial metrics we report." For more expert insight and the latest market action, click here to watch this full episode of Catalysts.
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