Roblox appears to be inflating its daily active users and engagement time in a bid to please investors and make sales on the stock market.
Hindenburg Research’s report explains that Roblox has losses totaling $1.07 billion for the last twelve months and is trading its stocks at 8.6x that of other gaming companies – such as Electronic Arts and Nintendo – in a bid to return to profitability and reach growth once more, something it hasn’t had since becoming a public company. However, to accomplish this, Hindenburg Research claims that “Roblox is lying to investors, regulators, and advertisers about the number of “people” on its platform, inflating the key metric by 25-42%.” It appears as though the company also lies about its engagement hours, inflating it by roughly 100%.
While the research shows that Roblox’s reported number of people does tend to match its reported daily active users (DAUs), that means little when you look into Roblox’s definition of DAUs – the company doesn’t treat it as “a measure of unique individuals accessing Roblox,” as it counts multiple accounts by the same person, meaning it includes bots in its totals. With that in mind, Roblox presents skewed numbers when talking about the number of people who use its platform.
According to Hindenburg Research, multiple employees have claimed that the company does track individual users internally (known as de-alting), further fueling the allegations of intentional inflation of its numbers. The research states that “interviews reveal Roblox effectively has two sets of books for counting users: one for internal business decisions, in which multiple accounts are ‘de-alted,’ and one used by the finance team that reports higher metrics to investors.” This means that Roblox is potentially feeding potential investors numbers that are 20 to 30% higher than the real figures.
It’s not just DAUs that Roblox appears to skew, as Hindenberg Research found that users spend an average of 22 minutes playing Roblox games each day, a stark contrast to the 2.4 hours the games platform reported in 2023. Upon investigation, the research also indicates that “obvious bot accounts remained in-game for more than 24 hours straight.” If true, that drastically boosts the real player engagement numbers.
Earlier this year, Dress to Impress reached one billion visits, which now sits at more than two billion, begging the question: how many are genuine visits, and how many are bots? The same can be said for any game that hits a huge milestone, including Blox Fruits, one of the most fun Roblox games out there, at least according to the near-50 billion visits.
So, we now know that Roblox appears to inflate daily users, but what about the 6.5 billion registered accounts? That number is courtesy of RoMonitor Stats, and considering that’s rapidly approaching the number of people that live on Earth, it’s fair to assume that a staggering number of those are bots. At least, that’s the indication of Hindenburg Research. In August 2024, Roblox’s CEO, David Baszucki, stated that the company plans to reach one billion DAUs, which alone, as Hindenberg Research points out, is 12.5% of Earth’s population.
Is Roblox’s approach working with investors? According to the research, more than 3.8 million shares have been sold in the last 12 months, equating to $150 million, of which $115 million comes from stocks sold by Baszucki himself. Since its public listing, Roblox has sold 27.8 million shares to the value of $1.7 billion. Whatever is going on at the company, there appear to be some internal concerns given that three major faces have left in the past year: the chief financial officer, the chief marketing and communications officer, and the chief technical officer.
It’s not just allegations regarding skewed numbers for investors that Roblox is facing, with popular games like Adopt Me! and Blox Fruits facing reports of being overrun by bot groups. However, Roblox has released a statement refuting the claims in the Hindenburg report.