The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Southern District of New York on behalf of those who acquired Roblox Corporation (“Roblox” or the “Company”) (NYSE: RBLX) securities during the period from March 10, 2021 through February 15, 2022 (the “Class Period”). Investors have until January 26, 2024 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
The class action complaint alleges that throughout the Class Period, Roblox reported strong bookings and revenue growth. The Company attributed this growth to various factors, including the positive effect from COVID stay-at-home orders, its technology investments, and high-quality gaming content. However, Defendants misled investors by failing to disclose that a material portion of Roblox’s growth was due to weak content controls and the lack of spending restrictions on its platform. These inadequate controls enabled younger Roblox users to play games with inappropriate content and make unauthorized Robux purchases which translated into unsustainable levels of bookings and revenue.
In September 2021, Roblox began to roll out enhanced user controls on its platform. Among other things, these new controls allowed parents to put monthly spending limits on their children’s Robux purchases. The Company did not disclose to investors that the implementation of these enhanced controls would inevitably cause Roblox’s bookings growth to decelerate in the fourth quarter of 2021 and throughout 2022.
On February 15, 2022, Roblox reported weak fourth quarter 2021 results. Most of Roblox’s key metrics missed analyst expectations, including quarterly bookings and revenue, leading to a significant decline in the Company’s stock price and significant losses for investors. On this news, the price of Roblox shares declined by $19.43 per share, or approximately 26.51%, from $73.30 per share to close at $53.87 on February 16, 2022.
The lawsuit alleges that, throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose that: (i) the Roblox platform had insufficient content controls and lacked user spending restrictions; (ii) these inadequate controls enabled younger Roblox users to play games with inappropriate content and make excessive, unauthorized Robux purchases; (iii) a material portion of Roblox’s bookings and revenue growth was due to these excessive, unauthorized Robux purchases; (iv) fourth quarter 2021 and 2022 bookings would be negatively impacted by Roblox’s planned rollout of enhanced parental controls; and (v) based on the foregoing, the Company’s bookings and revenue growth was unsustainable throughout the Class Period.
If you purchased or otherwise acquired Roblox securities, have information, or would like to learn more about this investigation, please contact Thomas W. Elrod of Kirby McInerney LLP by email at email@example.com, or by filling out this contact form, to discuss your rights or interests with respect to these matters without any cost to you.
Kirby McInerney LLP is a New York-based plaintiffs’ law firm concentrating in securities, antitrust, whistleblower, and consumer litigation. The firm’s efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling billions of dollars. Additional information about the firm can be found at Kirby McInerney LLP’s website: https://www.kmllp.com.
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