Roblox responds to controversial claims, says its metrics are sound

Roblox Corp. has responded to claims made by Hindenburg Research that its metrics, including daily active users (DAUs), have been exaggerated.

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A new lengthy report from Hindenburg Research alleges, among other things, that Roblox Corp. has drastically inflated a number of key metrics with its mega-hit games-as-a-platform title. Hindenburg, who is a known activist short-seller, has compiled data that alleges a portion of Roblox's reported playtime and daily active users (DAUs) are actually from bots.

Now Roblox has issued their own response, opening with: "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."

Activist short-selling in its own right is a controversial trading practice. These groups will pressure management and release negative research reports presumably in the efforts of reducing share value, and once shares drop, these groups swoop in to buy shares and sell short said shares.

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In its statement, Roblox clarifies how it calculates DAUs and its internal metrics. This information is disclosed on every quarterly 10-K SEC report issued out by the company.

The reports also freely acknowledge that bots are a part of the metrics and that Roblox Corp. takes proactive measures to detect these accounts and remove them from their service, and from the metrics themselves:

"Because DAUs measure account activity and an individual user may actively use our platform within a particular day on multiple accounts for which that individual registered, our DAUs are not a measure of unique individuals accessing Roblox.

"Additionally, if undetected, fraud and unauthorized access to our platform may contribute, from time to time, to an overstatement of DAUs.

"In many cases, fraudulent accounts are created by bots to inflate user activity for a particular developer's content on our platform, thus making the developer's experience (which refer to the titles that have been created by developers) or other content appear more popular than it really is. We strive to detect and minimize fraud and unauthorized access to our platform."