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Oct 8, 2024 57 tweets 22 min read Read on X
NEW FROM US:

Roblox—Inflated Key Metrics For Wall Street And A Pedophile Hellscape For Kids

$RBLX

(1/n)hindenburgresearch.com/roblox/
$RBLX is a $27 billion online gaming platform headquartered in San Mateo, CA.

The company was incorporated in 2004 and is led by founder and CEO David Baszucki.

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$RBLX has reported net losses every quarter since becoming a public company, with last twelve months (LTM) losses totaling $1.07 billion.

Its stock trades at 8.6x sales, a 57% premium to gaming peers, pricing in expectations of rapid future growth and profitability.

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Insiders have cashed out $1.7 billion in stock since the company’s 2021 direct listing.

In the last 12 months, insiders have sold ~$150 million in stock, including ~$115 million by CEO Baszucki personally.

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Since $RBLX isn’t profitable, its stock price (and, in turn, insiders’ ability to dump hundreds of millions of dollars of stock) is reliant on the growth metrics it presents to Wall Street.

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Our research indicates that $RBLX is lying to investors, regulators, and advertisers about the number of “people” on its platform, inflating the key metric by 25-42%+.

We also show how engagement hours, another key metric, is inflated by an estimated 100%+.

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Since prior to going public, $RBLX has reported the number of “people” on its platform in dozens of official investor communications.

Among many examples, Roblox wrote in a 2022 quarterly report, “there are over 54.1 million people coming to Roblox every day”.

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Our findings show that the company’s reported number of “people” regularly matches Roblox’s reported Daily Active Users (DAUs).

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But DAUs, according to Roblox’s own disclosure, “are not a measure of unique individuals accessing Roblox” because they can include numerous accounts run by a single person, such as alternate or bot accounts.

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Given these definitions, we believe Roblox intentionally conflates “people” with DAUs, consistently inflating the reported number of people on its platform.

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In 2023, $RBLX told the SEC it is “unable to identify if a user has multiple accounts”.

The company’s response to the SEC appears to be a flat out lie.

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Multiple former employees told us that Roblox does internally track single users with multiple accounts, referring to the process as ‘de-alting’.

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Interviews reveal $RBLX 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.

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$RBLX forums detail how users regularly have dozens of alternate accounts to “farm” for goods on Roblox, avert bans and increase their follower counts, among other reasons.

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In addition to alternate accounts, bots are rampant on the platform.

For example, Roblox’s 7th most popular game, Adopt Me!, has over 83,000 Change(.)org signatures to remove it from the platform due to extensive “botting” that “breaks” Roblox.

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$RBLX's 2nd most visited game, Blox Fruits, was dominated by traffic from Vietnam, a geography where we found numerous Facebook groups, including 5 with between 50,000 and 117,000 members, advertising and soliciting tools to run 20+ Roblox tabs at a time via bot programs.

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A former data scientist told us that activity in Vietnam “inflated a lot of our numbers, like crazy, insane, in terms of engagement, DAU[s]”.

~37% of Blox Fruits' YTD traffic comes from Vietnam & the Philippines, despite Asia being a small % of Roblox's reported DAUs.

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In addition to inflating the number of “people” on its platform, we also suspect Roblox massively inflates a second key metric, “engagement hours”.

The company reported an extraordinary average of 2.4 hours of engagement per day per user in 2023.

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This level of engagement is 58% higher than the average time spent by U.S. 8-12 year olds playing all mobile games (including tablet), according to a 2021 survey, and 26%-166% more time than leading social media platforms such as YouTube, TikTok and Instagram.

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To better understand the company’s reported engagement, we hired a technical consultant that monitored the top ~7,200 Roblox games across ~2.1 million Roblox servers, collecting 297.7 million rows of real-time player data.

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The data suggests that Roblox could be massively overstating the true level of user engagement across its platform: our review of an average of 30.4 million unique daily users found they spent just ~22 minutes in games per day.

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Further analysis of play times found numerous games in which obvious bot accounts remained in-game for more than 24 hours straight.

Our representative sample flagged millions of ‘zombie’ engagement hours that can majorly skew Roblox’s reported “average” engagement.

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$RBLX incentivizes developers to create ‘AFK’ (away from keyboard) games that artificially inflate engagement by tying developer pay in part to the metric.

Web forums detail developer strategies for creating features that encourage bots and zombie engagement.

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We think $RBLX can and should report its internal estimates of de-alted and de-botted metrics so that investors, advertisers, and regulators can be better informed about the actual number of “people” on the platform, and their genuine level of engagement.

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Beyond inflated key user metrics, our in-game research revealed an X-rated pedophile hellscape, exposing children to grooming, pornography, violent content and extremely abusive speech.

Warning: Explicit

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$RBLX is compromising child safety in order to report growth to investors, per our interview with a former senior product designer:

“If you’re limiting users’ engagement, it’s hurting your metrics…in a lot of cases, the leadership doesn't want that.”

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For the second quarter of 2024, in a push toward profitability, Roblox reported a 2% year-over-year decline in its trust and safety expenses.

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Core to the problem is that Roblox’s social media features allow pedophiles to efficiently target hundreds of children, with no up-front screening to prevent them from joining the platform.

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For example, in 2018, prior to Roblox going public, a 29-year-old was caught by police with 175 hours of video footage of him grooming and engaging in explicit behavior with 150 minors using online platforms, namely Roblox.

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Media exposés from 2020 to July 2024 revealed digital strip clubs, red light districts, sex parties and child predators lurking on Roblox.

The National Center on Sexual Exploitation in 2024 labeled Roblox “a tool for sexual predators, a threat for childrens’ safety”.

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Numerous criminal indictments from 2019-2024 allege that sexual predators groomed children in-game, ranging from 8-14 years old, then kidnapped, raped or traded sexual content with them.

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Following years of scandals, we decided to perform our own checks to see if the platform had cleaned up its act.

As a test, we attempted to set up an account under the name ‘Jeffrey Epstein’…only to see the name was taken, along with 900+ variations.

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Many were Jeffrey Epstein fan accounts, including “JeffEpsteinSupporter” which had earned multiple badges for spending time in kid’s games.

Other Roblox Jeff Epstein accounts had the usernames “@ igruum_minors” [I groom minors], and “@ RavpeTinyK1dsJE” [rape tiny kids].

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We tried to set up an account under the name of another pedophile to see if $RBLX had up-front screening:

Earl Brian Bradley was indicted on 471 charges of molesting, raping & exploiting 103 children.

The username was taken, along with variants like EarlBrianBradley69.

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After we found a username, we listed our age as “under 13” and browsed.

By merely plugging ‘adult’ into the Roblox search bar, we found a group called “Adult Studios” with 3,334 members openly trading child pornography and soliciting sexual acts from minors.

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We tracked some of the members of “Adult Studios” and easily found 38 Roblox groups - one with 103,000 members - openly soliciting sexual favors and trading child pornography.

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The Roblox chatrooms trading in child pornography had no age restrictions.

As a reminder, Roblox reports that 21% of users are under the age of 9, a number that is likely underestimated given that Roblox has no age verification aside from users seeking 17+ experiences.

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Registered as a child, we were also able to access Roblox games like “Escape to Epstein Island” and “Diddy Party”.

We found over 600 “Diddy” games, including “Survive Diddy” and “Run From Diddy Simulator”.
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Since September 2nd, 2024, third-party monitor ‘Moderation For Dummies’ has reported ~12,400 erotic roleplay accounts on Roblox.

These include everything from “rape/forceful sex fetishes” to underage users “willing to do anything for Robux”.

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Users seeking sexual experiences on Roblox are so pervasive that there are thousands of Roblox sex videos on porn sites, inviting users of unknown ages to make explicit content on the platform.

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We tested out Roblox’s experiences to see what else kids were being exposed to.

We quickly encountered images of male genitalia and hate speech in Roblox’s “school simulator” game, which had registered 28.9 million visits with no age restrictions.

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Despite the company’s mission “to connect a billion users with optimism and civility”, we found games such as “Beat Up Homeless Outside 7/11 Simulator”, which registered 1 million visits and 15,000 favorites before being removed from Roblox.

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Nonetheless, Roblox users identifying as 9 years old and up can still beat up homeless people in “Beat Up People Outside of 7/11” with over 900,000 visits.

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In the game “Beat Up The Pregnant”, users hacked pregnant women to death in a Wal-Mart parking lot with machetes or killed them with frying pans or a selection of guns.

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We played “[GUNS] Work at a Hospital” where users can go on a hospital shooting rampage.

The game has registered ~1.6 million visits and remains on the platform with no age restrictions.

The thumbnail for the game is a picture of a terrified pregnant woman.

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“LGBTQ+ Vibes” is a game available to all ages that has accumulated over 40.6 million visits and over 224,000 favorites.

Users regularly described lewd sex acts while others used hateful slurs.

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“Palestine And Israel Hangout” allows kids of all ages to purchase bombs and knives and attack each other.

This game has registered ~13 million visits and ~7,200 favorites and remains on the platform.

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Posing as a child in $RBLX's “therapy” experience, our therapist introduced himself as a “rapper with only one p”.

We were advised to run away from home so our therapist could pick us up and let us move into his basement in exchange for paying rent with our body.

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Some games seem to encourage illicit interactions, like “Public Bathroom Simulator Vibe” and “XYZ Club Vibe” with 31 million collective visits.

Both are available to users who self-identify as 9+ years old, who can simulate sex in bathrooms wearing skimpy outfits.

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Other Roblox users have identified issues of simulated rape, naked users, and rampant in-game sexual harassment.

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Despite claims of “best in the world” content moderation, our interviews with moderators show $RBLX safety was largely outsourced to Asian call centers.

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Moderators described being paid $12 a day to review countless instances of child grooming and bullying with a limited ability to keep perpetrators off the platform permanently.

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Finally, $RBLX faces saturation in top markets like U.S. & Europe.

It is attempting to keep the appearance of growth alive by adding loss-generating users in markets like Asia, per a former employee.

Profitability has plummeted despite reporting higher user metrics.

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The conversion rate of incremental new daily active users to paying users has been in steady decline since 2020.

Roblox is now expecting advertising to drive incremental growth, pitching advertisers by claiming ~79.5 million users spend 2.4 hours per day on the platform.

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As noted earlier, we suspect these metrics are wildly inflated and that the platform poses major reputational risks for advertisers.

For instance, we found Instagram ads in the same school simulator game that we found Nazi hate speech and photos of male genitalia.

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Overall, we think Roblox has adopted the Silicon Valley approach of ‘growth at all costs’, whether by misleading or outright lying to investors about its key metrics or by opening its platform to dangerous predators and illicit content unsuitable for children.

(56/n)
We are short shares of $RBLX.

Please see our report for our full disclaimer.



(57/n)hindenburgresearch.com/roblox/

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Roblox’s CEO David Baszucki was on CNBC today calling the platform a "a beacon for safety and civility".

We found over 50 Roblox group chat walls that are active right now, with no age restrictions, where users are soliciting child sexual exploitation content or sexual favors with children (many using thinly-coded language).

The list is not exhaustive. It took us only about an hour and a half to find these and there are many more. Roblox was made aware of these issues years ago and has done nothing substantive to address them.

Here are the first 10 (the max allowed by 'X'):

(1/x)

1.roblox.com/groups/3427091…
2.roblox.com/groups/1049975…
3.roblox.com/groups/5717913…
4.roblox.com/groups/1295898…
5.roblox.com/groups/1731081…
6.roblox.com/groups/3784054…
7.roblox.com/groups/4856095…
8.roblox.com/groups/1074759…
9.roblox.com/groups/3462078…
10.roblox.com/groups/1534606…Image
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Here are several accounts that are active on Roblox right now, through a quick search:

(2/x)

1.roblox.com/users/72315566…
2.roblox.com/users/48802304…
3.roblox.com/users/74353130…
4.roblox.com/users/43377994…
5.roblox.com/users/51645477… Image
Last week, it was reported that a woman was arrested after using Roblox to instruct a 10-year-old to drop a baby, almost killing it.

As with almost everything on Roblox, there's an 'experience' for it.

Here is a game that has been active on Roblox since 2021 called "baby dropping simulator", with 230,600 visits, that Roblox has deemed appropriate for users identifying as 9+ years old.

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(3/x)

roblox.com/games/80121728…
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