Roblox Shares Sink On Short Report Saying Gaming Company 'Has Facilitated More Child Abuse Than Any Public Company In History'

Video game company Roblox (NYSE:RBLX) is once again in the crosshairs of a short seller, with a follow-up from a 2022 report that highlighted problems for the company, which is aimed at children.

What Happened: Short report publisher The Bear Cave, led by Edwin Dorsey, is out with a report highlighting “even more problems at Roblox.”

The report follows a February 2022 report that called out accusations of pedophilia on the gaming platform.

“Today’s investigation by The Bear Cave finds that Roblox has facilitated hundreds of known child abuse cases, popular Roblox game developers have been arrested on child abuse allegations, Roblox games include images of dismembered bodies and Nazi logos, and the company has been linked to child suicide attempts and the widespread production of child pornography,” The Bear Cave writes.

The report said that Roblox “has facilitated more child abuse than any public company in history.”

Benzinga has reached out to Roblox for comment on the short report and will update the story as necessary.

Dorsey uses news reports of adults meeting children who they befriended on Roblox to paint the case.

The short report said that Roblox game developer Arnold Castillo was arrested on charges related to minors in July 2022, which came after developing a popular Sonic the Hedgehog game on the platform in 2017.

Images shared by Bear Cave show Roblox digital clothing featuring swastikas and dismembered bodies.

Bear Cave also highlights problems with Robux, the in-game currency for Roblox. The report alleges that Roblox users are being encouraged to commit ad fraud and gambling activities to earn free Robux.

After the February 2022 short report, Roblox spoke to Benzinga about the allegations.

“Today there was a post about Roblox that presents a wholly misleading, false and irresponsible picture of how our platform and company function and ignores 17 years of safety and civility being core to our company values,” a Roblox spokesperson previously told Benzinga.

The spokesperson said Roblox was built with a “safety-first culture” and said that the gaming company provides a “safe and civil space” for members.

“We have zero tolerance for inappropriate content and behavior in our social spaces. In an effort to eliminate unsafe content, we review every single image, audio file and video before it is published.”

Roblox uses human moderation and “state-of-the-art automated machine learning technology,” the spokesperson told Benzinga.

Related Link: Roblox Stock Tumbles On Q2 Report, What's Going On? 

Why It’s Important: The February 2022 short report against Roblox took on game developers, users and also the former social media manager of Roblox.

Bear Cave said that Roblox’s former social media manager “ran a pornographic blog” while he was employed by the gaming company.

In recent interviews, Roblox CEO David Baszucki has highlighted the importance of safety for the gaming company and said that artificial intelligence could help reduce the company’s spending on safety, according to the report.

“Our Trust and Safety teams have been running all kind of AI models for the last three or four years, both on quality and on cost,” Baszucki said.

Dorsey said competition could be coming for Roblox, with LEGO and Epic Games teaming up for a game aimed at the same target demographic.

“Despite its nearly 20 years of operation, Roblox remains consistently unprofitable and now faces a future filled with more competition, more regular scrutiny, and more compliance and safety costs.”

RBLX Price Action: Roblox shares are down 4% to $28.01 at the time of writing versus a 52-week trading range of $25.32 to $47.67. Shares of Roblox are down 41% over the last year.

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