Roblox shares are reacting to the latest report from Hindenburg Research

In a new report, short seller Hindenburg Research claims that gaming platform Roblox (RBLX) is inflating its user metrics and even alleging an unsafe online environment for younger users.

“The reason they think it's exaggerated is because they say every user has the potential to open many alternative accounts. And people do… I don't think the vast majority do, but some do. So they are.” If you measure users, you could say there are 79.5 million daily active users, although Hindenburg says the number is 22% lower,” explains Michael Pachter, managing director of equity research at Wedbush . “So let’s just say 60 million. Who cares? Revenue rose from $2.8 billion to $3.5 billion in '22-23, and this year it rises again to $4.2 billion.

Pachter joins the Catalysts team to examine the contents of the report. Citing Bloomberg's July investigation into combating predatory behavior, he notes that Hindenburg's data is based on “shaky, shaky foundations.”

Yahoo Finance received a response from a Roblox spokesperson after this segment aired:

“We completely reject the allegations made in the report. Hindenburg Research's financial claims are simply misleading. The authors are admittedly short sellers and are pursuing an agenda regardless of the substance of Roblox's business model and results… We firmly believe that Roblox is a safe platform and in the financial metrics we report.”

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This post was written by Luke Carberry Mogan.