Roblox Corp (NYSE:RBLX) stock plunged on Tuesday after Hindenburg Research issued a short report on the online game platform questioning its metrics such as user numbers.
The report alleged that Roblox inflated key user metrics, claiming daily active users (DAUs) and engagement hours are overstated by 25-42% and over 100%, respectively.
The report alleged that Roblox inflated key user metrics, claiming daily active users (DAUs) and engagement hours are overstated by 25-42% and over 100%, respectively.
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00:00That's Hindenburg report. Yeah. Yeah. And then Berg is so Roblox getting Hindenburg. Yes. We're using it as a verb here
00:09Yeah inflated they're saying in Roblox has inflated key metrics and that there's also some child safety issues
00:17From what I can see from this short report
00:20Sounds it's very similar to a short report that was put out a couple years ago by Edwin Dorsey
00:25Who I've gotten to know over at the bear cave
00:28Maybe we'll have to bring Edwin on and talk about it because again, he put a short report out on Roblox
00:33Outlining these same exact issues that it looks like Hindenburg is now outlining now
00:38So, you know, it's always hard to tell in the immediate aftermath of when a short report comes out how much?
00:45You know weight does it hold how much does the market, you know?
00:49It usually comes down to like, you know the reputation of the person putting the short report out
00:53But then you got to go through and see okay, how much of this is like?
00:57usually there's truth in it, but how much of it is like fully true versus maybe the
01:02Short, you know report kind of exaggerating some of it
01:05But it sounds like if both of these short reports are saying the same exact thing that there might be some weight there
01:10For what they're saying here about Roblox data suggests the Roblox could be massively
01:16Overstating the true level of user engagement across its platform
01:20There's some pretty serious allegations here to saying that they're exaggerating numbers
01:26second quarter 2024
01:30Yeah there I'm just reading through it all there's so much information here
01:34It's gonna take us an hour to leave through all this but bottom line here is they're talking about inflating and numbers
01:41Obviously and the user engagement user engagement numbers, so that's getting head here
01:46It's always interesting Joel's point that the stock is very weak going into this, you know
01:52We've often talked about, you know, do these, you know short sellers front load it and then come in
01:57I mean, I think there's
02:00I know Jay mentioned that there was some of them that don't trade but that that doesn't mean you can't that some of them
02:07Don't actually put on trades. I don't yeah
02:10You know some of them do obviously there's a lawsuit against Citroen right now Andrew left is
02:16You know got a lawsuit going against them for you know, and I'm not saying, you know, everybody's entitled to their opinion
02:23Everybody's entitled to you know, say what they want to say
02:26So, you know freedom of speech is very, you know, you want to write a report and you're doing some great research
02:31We appreciate that as long as they're not just no reporting and then covering into it. I wouldn't have a problem with it
02:38So it depends on like if they're shorting it and they're issuing a report I don't think it's an issue
02:43I think the issue would be like the timing of like when you're covering it
02:47So that's I think with Citroen, you know, that's was you know
02:51Then I think the DOJ didn't like the timing of the of the covers
02:57Yeah, so again
03:01Spinner saying it might just be paid research only so we don't know this
03:05Someone got the research
03:07Hindenburg I tell you out of all of them. There's a lot of respect for Hindenburg
03:11There's a lot of respect for Hindenburg
03:13So there's definitely a hierarchy here of like, you know, how influential some of these reports are
03:21I mean you got anonymous shooting Panda over there shooting down stocks that we don't even know who they are
03:27Hindenburg has a lot of respect on the street
03:30So when they issue something like this, it's gonna move the stock and Wall Street's gonna take note, so
03:37I'll just say they're very well respected on the street at this time