Roblox (RBLX) stock is down 7% on news that the U.S. State of Louisiana is suing the video game platform for allegedly endangering children.
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The lawsuit alleges that Roblox’s online platform is used for widespread child abuse and sexual exploitation, saying the company has allowed predators to thrive online through “willful disregard and deceptive practices.” Roblox has not commented publicly on the lawsuit.
“Roblox is overrun with harmful content and child predators because it prioritizes user growth, revenue, and profits over child safety,” said Louisiana Attorney General Liz Murrill in a statement about the lawsuit. The southern state is asking the court to permanently keep Roblox from “representing that Roblox has adequate safety features.”
Age Verification
A central issue in the lawsuit is age verification on the Roblox platform. The Louisiana State lawsuit claims that the company doesn’t provide protections such as required age verification. Age verification is required by some U.S. states for social media and pornography websites.
Roblox has optional age verification to activate certain features like group voice chat, according to past statements from the company. Roblox has millions of video games on its platform, most of which are made by users. The gaming platform also acts as a social media platform where users can hang out with friends in virtual worlds and communicate via text and voice chat.
The Roblox app saw an average of 112 million users a day in the last quarter, and people spent a total of 27 billion hours on the platform. The majority of users are under the age of 18, according to the company.
Is RBLX Stock a Buy?
Roblox stock has a consensus Strong Buy rating based on 20 Wall Street analysts. That rating is based on 16 Buy, three Hold, and one Sell recommendations issued in the last three months. The average RBLX price target of $145.20 implies 25.09% upside from current levels.
