The dark clouds that hang over Roblox have been well-documented by us for quite some time, but now there’s a damning new report from short-seller Hindenburg Research that accuses the company of “[inflating] key metrics for Wall Street” while calling the game itself “a pedophile hellscape for kids.”
Hindenburg claims that its research “revealed an X-rated pedophile hellscape, exposing children to grooming, pornography, violent content and extremely abusive speech,” referencing media and non-profit exposes between 2020 and 2024 that uncovered “digital strip clubs, red light districts, sex parties, and child predators lurking on Roblox.”
The firm also created its own fake underage account that it says easily found multiple groups and games where members trade child pornography and encourage underage users into digital sex acts for Robux; it also found games that simulate school and hospital shootings, murdering pregnant women, and beating up homeless people – all while the company reduced its spending on trust and safety by 2% YoY in the second quarter of 2024 in what the firm calls “a push towards profitability.”
The report further asserts that Roblox Corp is juicing the numbers of players on its platform by as much as 42% and hours played by as much as 100%. Hindenburg cites Roblox’s own alleged conflation of daily active users that can include alts with individual people, bot farms that appear to be inflating those active user numbers, insider reports that the company can track specific user counts through a process known as “de-alting,” and the encouragement of AFK games that artificially inflate engagement hours. The firm concludes this is done because Roblox Corp’s stock price – and insiders’ ability to dump hundreds of millions of dollars of stock – is reliant on those metrics.
The inflammatory report caused Roblox Corp to muster a clear denial of Hindenburg’s findings in a statement: It claims that “tens of millions of users of all ages have safe and positive experiences on Roblox,” asserts that the game has “a robust set of proactive and preventative safety measures designed to catch and prevent malicious or harmful activity on the platform,” and accuses Hindenburg of being “misleading” about the company’s financial disclosures and having an agenda “irrespective of the substance of Roblox’s business model and results.”
Hindenburg’s track record in investment activism spans the last decade, even touching on Riot Games, but we must point out here that the company is primarily a notorious short seller. Its MO is basically to sell borrowed stock at today’s price, then try to crash the price and buy it back cheaper. To do this, it launches a massive investigation and well-researched hit piece to influence investors. This company is notable because it tends to be correct in its bets; according to a CNBC report from earlier this year, Hindenburg deliberately targets “house of cards” companies with serious problems (“Popping bubbles where we see them” is the money quote). Given the longstanding drama from Roblox and years of weird financials, you might start to understand why it picked Roblox as a target.
Either way, it’s worth keeping in mind there’s a financial motivation in this particular form of activism. But given everything we know about Roblox’s history already, the report isn’t easily dismissed.
