Labaton Sucharow LLP (“Labaton Sucharow”) announces that, on November 27, 2023, it filed a securities class action lawsuit (the “Complaint”) on behalf of its client DeKalb County Pension Fund against Roblox Corporation (“Roblox” or the “Company) (NYSE: RBLX) and certain Roblox officers (collectively, “Defendants”). The action, which is captioned DeKalb County Pension Fund v. Roblox Corporation, No. 23-cv-10347 (S.D.N.Y.), asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), and U.S. Securities and Exchange Commission (“SEC”) Rule 10b-5 promulgated thereunder, on behalf of all persons or entities who purchased or otherwise acquired Roblox Class A common stock between March 10, 2021 and February 15, 2022, inclusive (the “Class Period”).
Roblox operates a platform that provides developers with tools to create online games and hosts the games on its servers. Roblox generates revenue by selling its proprietary currency (called “Robux”) to its users so they can purchase digital items (e.g., weapons, armor, or vehicles) to enhance their gaming experiences.
The 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 late 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. Unbeknownst to investors, 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, the truth about the Company’s unsustainable growth was revealed to investors when Roblox reported surprisingly weak fourth quarter 2021 results. Most of Roblox’s key metrics missed analysts’ expectations, including quarterly bookings and revenue, leading to a significant decline in the Company’s stock price and significant losses for investors.
The Complaint further alleges that statements made by Defendants throughout the Class Period were materially false and misleading when made because they misrepresented or failed to disclose that: (1) the Roblox platform had insufficient content controls and lacked user spending restrictions; (2) these inadequate controls enabled younger Roblox users to play games with inappropriate content and make excessive, unauthorized Robux purchases; (3) a material portion of Roblox’s bookings and revenue growth was due to these excessive, unauthorized Robux purchases; (4) fourth quarter 2021 and 2022 bookings would be negatively impacted by Roblox’s planned rollout of enhanced parental controls; and (5) based on the foregoing, the Company’s bookings and revenue growth was unsustainable throughout the Class Period.
If you purchased or acquired Roblox Class A common during the Class Period and were damaged thereby, you are a member of the “Class” and may be able to seek appointment as Lead Plaintiff. Lead Plaintiff motion papers must be filed no later than January 26, 2024. The Lead Plaintiff is a court-appointed representative for absent members of the Class. You do not need to seek appointment as Lead Plaintiff to share in any Class recovery in this action. If you are a Class member and there is a recovery for the Class, you can share in that recovery as an absent Class member. You may retain counsel of your choice to represent you in this action.
If you would like to consider serving as Lead Plaintiff or have any questions about this lawsuit, you may contact Francis P. McConville, Esq. of Labaton Sucharow, at (212) 907-0650, or via email at fmcconville@labaton.com. You can view a copy of the complaint online at URL.
DeKalb County Pension Fund is represented by Labaton Sucharow, which represents many of the largest pension funds in the United States and internationally with combined assets under management of more than $3.75 trillion. Labaton Sucharow’s litigation reputation is built on its half-century of securities litigation experience, more than seventy full-time attorneys, and in-house team of investigators, financial analysts, and forensic accountants. Labaton Sucharow has been recognized for its excellence by the courts and peers, and it is consistently ranked in leading industry publications. Offices are located in New York, NY, Wilmington, DE, and Washington, D.C. More information about Labaton Sucharow is available at www.labaton.com.
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