Hindenburg Research has taken a short position in online gaming platform Roblox Corporation, accusing the company of lying to investors and regulators about the number of 'people' on its platform, sending the shares sharply lower in pre-market trade on October 8.
Hindenburg Research alleged the videogame company has been lying to investors and regulators about the number of users on its platform.
The note said Roblox has inflated the metric of users by 25-42% and engagement hours by more than 100%, said the US-based short seller.
The video gaming company, known for its popularity among younger gamers, is accessible across consoles, smartphones, tablets and PCs.
Its second-quarter bookings exceeded estimates, benefiting from summer holidays in the US, which allows gamers to spend more time on its platform.
The company conflated "people" with its daily active users, based on its own definition of DAUs which says the metric is not a measure of "unique individuals accessing Roblox".
DAUs could include bots or alternate accounts and is not a precise indicator of number of users, the short seller said.
The company raised its annual bookings forecast in August as it benefits from strong spending on the various games available on the platform.
With inputs from Reuters
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
