Although at its peak of success, Roblox has often flown under the radar while being a multimillion-dollar business, the economic fallout is starting to draw attention from the markets, especially the controversies surrounding this gaming and multimedia platform. Today, Roblox Corporation saw its stock price plummet following a report from short-selling research firm Hindenburg Research.
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Roblox stocks crash after controversial report from a financial firm
The stock price of Roblox Corporation registered a drop of 9.4% at the opening of the New York Stock Exchange today, and so far this year, it has lost more than 15% of its value; at the time of writing, the price per share continues to decline at 3.49%. The reason? Hindenburg Research published a report warning about negative details related to the platform and its global success. According to the research firm, key metrics for Roblox have been inflated by the company, meaning they do not correspond to reality. Additionally, it alerted the market to the lack of safety for minors who are exposed to inappropriate content and at risk from predators who take advantage of the weak measures in place before joining the community.
It is worth noting that the issue of abuse and harassment of minors is once again under consideration in the United States, following the arrest of producer and businessman Sean "P. Diddy" Combs, accused of leading a network of exploitation in the music industry.
In response, a spokesperson for Roblox Corporation stated: "We fully reject the claims made in the report. The authors are undoubtedly short sellers with an agenda independent of the substance of our business model and the results of Roblox. We firmly believe that Roblox is a safe and protected platform and that the financial metrics we report are accurate."
Don't miss out: Roblox is accused of exploiting minors, prompting this country to ban it to "protect its children."
Accusations against Roblox regarding the lack of measures to protect minors are not new. This year, a study revealed a 300% increase in harassment cases against underage players. Furthermore, the platform is accused of exploiting this demographic by incentivizing content creation while paying them a fraction of the multimillion-dollar revenues it earns from marketing these creations.
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