- Hindenburg Research has accused Roblox of inflating key metrics
- Roblox is accused of “intentionally” conflating DAUs and individual people
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Roblox has been accused of inflating key metrics like its engagement hours by an estimated 100%.
Financial research firm Hindenburg Research has argued that Roblox is misleading investors, regulators, and advertisers about the number of people using the platform. It alleges that Roblox overestimates this by anywhere from 25% to 42%.
Roblox claims to have 79.5 million daily active users.
Conflating figures?
“Since Roblox isn’t profitable, its stock price (and, in turn, insiders’ ability to dump hundreds of millions of dollars of stock) is reliant on the growth metrics it presents to Wall Street,” said Hindenburg Research.
According to the firm, insiders have cashed out a total of $1.7 billion in stock since Roblox’s 2021 direct listing, and over the past year, Roblox CEO David Baszucki has himself sold around $115 million in stocks.
Yet the company claims to be growing, with monthly unique payers up 22% year-on-year and average bookings per DAU up 1% this Q2.
Roblox has previously acknowledged that DAUs “are not a measure of unique individuals accessing Roblox”, as one person may have multiple accounts. However, Hindenburg has argued that Roblox is “intentionally” conflating DAUs and individual people in its reports, giving the impression of having more users than is reality.
The research firm suggested bot accounts may influence this figure.
Racking up the hours
Bots could also be especially influential in Roblox’s reported engagement hours, according to Hindenburg.
Roblox claims to have recorded an average engagement time of 2.4 hours daily per user last year, but Hindenburg noted this would be 58% above average mobile playtime in the US for children aged 8 to 12.
This would also beat social media interaction time by as much as 166%.
To investigate this, Hindenburg hired a technical consultant to monitor engagement time in Roblox, collating 297.7 million rows of real-time player data across an average of 30.4 million DAUs.
The consultant looked at around 7,200 top Roblox games over 2.1 million servers and found the average playtime was only 22 minutes per day.
Upon “further analysis”, however, Hindenburg claims to have found numerous bot accounts remaining in-game for over 24 hours at a time, collectively racking up “millions” of hours and inevitably skewing Roblox’s engagement data.
“Roblox incentivises developers to create AFK games that artificially inflate engagement by tying developer pay in part to engagement,” said Hindenburg Research.
“We think Roblox can and should report its estimated de-altered and de-botted metrics so that investors, advertisers, and regulators can be better informed about the actual number of ‘people’ on the platform and their genuine level of engagement.”
It should be noted that Hindenburg often investigates companies in which it holds stocks, shorting them as a result of its reports.
Roblox responded to the firm’s claim: “The financial claims made by Hindenburg are misleading. The authors are short sellers and have an agenda irrespective of the substance of Roblox’s business model and results. Roblox’s topline is growing quickly.”
