If you're looking for reasons to limit the amount of time your kid spends playing video games, one short seller just gave you a new one—although it will probably work just as well as all your previous attempts.

Today, Hindenburg Research, the notorious activist investigative firm that previously targeted big fish like Carl Icahn and Gautam Adani, unveiled its short position in online gaming company Roblox.

Shares of Roblox sank 2.17% on the news.

Hindenburg accused Roblox of a slew of financial improprieties related to inflating user data. “Our research indicates that Roblox is lying to investors, regulators, and advertisers about the number of ‘people’ on its platform, inflating the key metric by 25-42%+. We also show how engagement hours, another key metric, is inflated by an estimated 100%+,” authors of the report wrote.

Roblox vehemently denied the allegations in a statement to Brew Markets. “The financial claims made by Hindenburg Research are simply misleading. The authors are, admittedly short sellers and have an agenda irrespective of the substance of Roblox’ business model and results,” a spokesperson wrote via email.

Most disturbingly, Hindenburg also called the platform, which is popular among kids, a “pedophile hellscape,” claiming that Roblox exposes child users to “grooming, pornography, violent content and extremely abusive speech.” A Roblox spokesperson emphasized that the gaming platform is “safe and secure.”

Short seller vs. big hit

The newsletter Bear Cave, which is popular among short sellers, has also published pieces sounding tentative alarms about Roblox’s business since 2022.

Shares of Roblox have climbed about 34% over the past 12 months as the gaming platform amassed users, though it has fallen about 6% in 2024 after the company cut its booking guidance in the first quarter.

Roblox shares recovered slightly by the end of the day after the company responded to Hindenburg’s claims. The spokesperson from Roblox pointed out that the company’s cash receipts grew 22% between the second quarter of last year and fourth quarter of this year, from $780.7 million to $955.2 million, hinting that the user numbers Hindenburg accused the company of faking have led to very real returns.

While Roblox’s denial might reassure shareholders, Hindenburg is not to be underestimated. Earlier this year, their report on Ichan resulted in regulators fining him $2 million.—LB

🟢 What’s up

• If you can’t beat ‘em, join ‘em: WW International, aka WeightWatchers, soared 46.95% after the company announced it will begin offering GLP-1 weight-loss drugs.
• Nvidia rose 4.05% after the Foxconn CEO told CNBC that AI demand is still incredibly strong.
• Trump Technology & Media Group soared 18.54% after Tesla CEO Elon Musk appeared alongside the former president at a rally in Pennsylvania over the weekend.
• Palantir popped 6.58% after the CTO of the data analytics firm appeared on CNBC and told everyone that his company is making mad money.
• Welcome to the club: S&P Global announced that DocuSign is replacing MDU Resources Group in the S&P MidCap 400 index, while MDU is moving to the S&P SmallCap 600 index. Docusign rose 6.55% on the news, while MDU gained 2.44%.
• Humana finally caught a break when a Bernstein analyst upgraded the stock today, writing that the health insurer has been hurt enough. Shares rose 2.92%.

What’s down

• What goes up must come down: Chinese stocks, which have enjoyed an impressive rally recently, came tumbling back to Earth today after the country’s state planner didn’t announce any new stimulus measures. Bilibili fell 12.93%, JD.com lost 7.52%, Alibaba sold off 6.67%, and Nio dropped 8.10%.
• Today’s oil selloff pummeled energy stocks: Valero Energy lost 5.31%, while Marathon Petroleum stumbled 7.66%.
• Sphere Entertainment dropped 2.84% on the news that its CFO is leaving the company.
• Super Micro Computer gave back 5.01% after its rally yesterday as investors pocketed their profits.

Hurricane Milton, which has gained strength over the last few days and become a Category 4 storm, is expected to reach Florida’s coast tonight—just a week after Hurricane Helene tore through the US, killing over 200 people

As people prepare to weather the storm, investors are also forecasting what the damage will be to the economy and markets.

“[Hurricane Milton] is likely to be the most damaging hurricane since Hurricane Ian in 2022, which resulted in well over ~$50 billion of losses,” wrote Morgan Stanley analyst Bob Jian Huang in a note yesterday. “While early estimates on Hurricane Milton should exceed double digit billions, location of the landfall will be important,” he added.

Historically, hurricanes tend to blow through insurance stocks, power companies, oil producers, and construction companies, which triggers domino effects through the entire economy.

• Energy firms operating in the path of destruction like ExxonMobil and BP plc were down 2.66% and 3.35% today, respectively, as investors anticipate damage to refineries.
• Energy traders are also expecting widespread power outages, which has sent natural gas futures down 8% over the past three days.
• Insurance companies, which took a big hit amid billions in property damage thanks to Hurricane Helene, will sink even further in the coming storm. Allstate and Travelers Cos. have fallen 3.57% and 1.73%, respectively, over the last five days.
• Home repair retailers like Home Depot and Lowe’s tend to benefit from reconstruction efforts after the storm clouds clear. Home Depot rose about 1.48% and Lowe’s climbed 1.76% today.
• Meanwhile, backup power generators are in high demand. Generac Holdings has jumped 8.4% over the last five trading sessions.

A tornado-like twist

Insurance and energy companies will be roughed-up in the storm, but some hurricane investments are less intuitive. For example, fears of widespread destruction across the Orange State have sent orange juice futures soaring.

Goldman Sachs also noted that Disney could take a big hit to its bottom line, given closures and damages to its theme park. Goldman analysts projected that the storm could lead to anywhere from a $150 million to $200 earnings reduction for its theme park division this quarter.

As hurricanes become more frequent and deadly due to the effects of climate change, the scale of destruction is likely to increase as well, experts say—which means more stocks will be swept up in the storm.—LB

• Strip malls are everywhere you look, and Americans are visiting them more than ever. Now, big box retailers like Macy’s want a piece of the action.
• A new bitcoin documentary may unmask the mysterious creator of the biggest cryptocurrency in the world.
• Federal prosecutors are expected to submit their ideas today for what to do with Google if the massive tech company is broken up by the DOJ.
• French fries are a subtle economic indicator, but lower sales may point to lower spending elsewhere among American consumers.
• Small businesses grew a little more optimistic last month, though their top fear is still inflation.
• 5 undervalued stocks to buy in the fourth quarter, including FMC, Dow, and Sun Communities.

Tomorrow is the calm before the CPI storm, with the only economic report of note wholesale inventories, which gives us a glimpse into the inventory levels for manufacturers across the country. The manufacturing industry has struggled for months now, though with rate cuts finally arriving, this report may mark a turning point.

We’ll also get the minutes from the Federal Open Market Committee’s September meeting. While we already know what happened (the FOMC cut interest rates by half a percentage point, fyi), it could be informative to learn more about the central bankers’ thinking behind the decision.

Before the open

• Helen of Troy (HELE) may not ring a bell, but you’ve almost certainly heard of the brands this houseware and beauty retailer sells under, like Hydro Flask, Drybar, Braun, Vicks, and more. Unfortunately, that hasn’t translated into a strong 2024—last quarter’s earnings were abysmal, and the stock plunged in its biggest-ever single-day drop. Shares haven’t recovered, and shareholders are worried slower consumer spending won’t do the stock any favors this quarter either. Consensus: $1.04 EPS, $548.24 million in revenue.

Things Mars is:

• The fourth planet from the sun, the second-smallest planet in our solar system, and half the size of Earth.
• The Roman god of war, and the namesake of the month March.
• The last name of title character Veronica Mars, Kristen Bell’s character from the criminally underrated early 2000s TV show.

Things Mars isn’t:

• A publicly traded company

Listen, when you spend all day arguing if candy corn is delicious or an abomination, you can get lost in the weeds and forget the big picture. We’re sorry for misleading you about the competitive candy market yesterday—we hope you’ll forgive not only us, but also forgive the American consumers who allowed Hot Tamales to sneak into the 10 most popular Halloween candies in the country.—MR