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Roblox is overinflating its user numbers, according to eye-popping report

A new report claims that Roblox has inflated its user numbers to placate investors and has become a haven for child safety concerns.

A damning new report concerning mega metaverse Roblox claims the company has been “lying to investors, regulators, and advertisers,” specifically about the number of active users and the presence of child and sexual exploitation on the platform.

The analysis from Hindenburg Research is quite a read — both in length and in terms of substance — but the basics are that it believes Roblox Corp. has inflated its daily active user stats by about “25-42% or more” and engagement hours by around 100% since it doesn’t take into consideration bots or alt accounts.

Hindenburg uses the report to show how Roblox conflates “daily active user” with “person” in various settings but won’t in others, like in SEC filings. Many users create alt accounts so that their main one won’t get compromised. This is a common practice among many online video games and platforms.

“Independent Roblox data monitor RoMonitor indicates there are 6.5 billion total registered Roblox accounts as of this writing, a number approaching Earth’s population,” the report says. While Roblox has said that it can’t differentiate alt accounts from main ones (a process called “de-alting”), Hindenburg sources, including former Roblox employees, say otherwise. They also add that Roblox hires a different team to present numbers to investors.

Hindenburg writes that Roblox has reported net losses every quarter since it went public, and mostly relies on its growing player base to placate investors. In September, CEO David Baszucki revealed during the Roblox Developers Conference that the company is aiming for 300 million daily active users, up from its current reported 79.5 million daily active users. This was along with some big announcements, including new ways for creators to sell physical merchandise, and an affiliate program to reward people for bringing new users to the platform.

In addition, the report reveals “scores of abuse” toward children who use the platform. Roblox is free to use and has no minimum age requirement for users, although it does employ a rating system for its games and experiences, including an all-ages one with no restrictions. It’s been reported in the past that Roblox has a lot of issues in this area, including a recent Bloomberg article that interviewed current and former workers who said the platform has a child safety problem.

There are a ton of games to play on Roblox that provide perfectly normal gameplay, and many well-known brands like Ikea and Fandango have used the platform to promote what are called “experiences.” However, the report names many games that are unfit for a platform with children, including ones named after sex trafficker Jeffrey Epstein and alleged sexual abuser Sean Combs.

Hindenburg is an activist financial research firm that specializes in calling out corporations and startups for exploitive and mistrustful behavior. It’s probably best known for a 2020 report against Nikola, a company that claimed it had created a zero-emission semi-truck and was on track to strike a deal with General Motors. A few years later, the Nikola CEO was sentenced to four years in prison for lying about “nearly all aspects of the business.”

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