16 hours ago
‘Hundreds of Lawsuits' Coming Soon Against Roblox Over Child Abuse
Gaming platform Roblox (RBLX) is about to face a swarm of lawsuits alleging child abuse. According to Wired, a group of law firms across the U.S. is seeking to file 'hundreds of lawsuits' by the end of September. These lawsuits are being filed on behalf of clients who allege that Roblox facilitated the sexual exploitation and grooming of their children. Roblox offers a wide range of popular games loved by kids, including Adopt Me!, Grow Garden, and Blox Fruits, which attract millions of daily players and showcase the platform's creativity and variety.
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These allegations came to light last week, after Louisiana Attorney General Liz Murrill filed a lawsuit accusing the company of failure to develop adequate safety protocols and creating a platform that she described as the 'perfect place for pedophiles.' Following the news, RBLX stock fell 6.3% on Friday.
Roblox's Problems Are About to Get Bigger
Benchmark analyst Mike Hickey noted that the investigation adds to already mounting legal and reputational pressures on Roblox. Hickey commented, 'With hundreds of millions of active users, heightened media exposure could amplify regulatory and consumer risks for the company.' Despite the challenges, Hickey maintains a 'Buy' rating on RBLX stock with a price target of $150, implying 25% upside potential from current levels.
This is not the first time Roblox has faced such lawsuits. During the pandemic, and again in 2023, Roblox was accused of 'negligent misrepresentation and false advertising.' Those lawsuits also alleged that Roblox's in-game purchasing system, Robux, functioned like 'illegal child gambling.'
Law Firms Are Filing Hundreds of Lawsuits
Currently, Roblox has about 111.8 million daily active users. The report cited a conversation with Matt Dolman of Dolman Law Group, who stated that the firm had already filed about 300 cases against Roblox. He highlighted that a majority of these clients are under the age of 16, with an estimated 60% of the cases involving girls. Additionally, he predicted that by next year, Roblox could be facing more than a thousand lawsuits.
Additionally, Martin Gould of Stinar Gould Grieco & Hensley revealed that his firm is representing 'over 400 victims of sexual abuse and grooming on Roblox and Discord… some of them are pretty horrific cases.'
In response, Roblox stated, 'We are deeply troubled by any incident that endangers our users, and safety is a top priority.' The company added that while no system is perfect, Roblox has strong safety rules, including blocking the sharing of personal details, links, and images, and banning sexual conversations. Roblox has strengthened its parental controls, AI-driven moderation systems, and third-party safety audits.
Is Roblox Stock a Good Buy?
On TipRanks, RBLX stock has a Strong Buy consensus rating based on 16 Buys, three Holds, and one Sell rating. The average Roblox price target of $146.35 implies 22% upside potential from current levels. Year-to-date, RBLX stock has surged 107.3%.
