Roblox stock drops after Hindenburg Research short report

Roblox stock tumbled more than 9% in premarket Tue following a scathing short report from Hindenburg Research.

The report criticizes the online gaming platform for inflated user metrics, persistent losses, and serious safety concerns regarding child users.

Hindenburg's report points out that Roblox has not turned a profit since going public, with losses totaling USD1.07 billion over the last twelve months.

Despite the company's market valuation of approximately USD27 billion, Hindenburg highlights that Roblox's stock trades at 8.6 times sales, significantly above its gaming peers.

This pricing, the short seller argues, reflects unrealistic expectations for future growth and profitability.