Roblox Corporation (RBLX) saw its stock price plummet by 5.02% during Wednesday's trading session, following news that Iraq has banned the popular user-generated videogame platform. The ban, announced by the Iraqi government, cited concerns over child safety and the platform's potential for exploitation and cyber-extortion.

The Iraqi communications ministry stated that the nationwide ban was based on a comprehensive study and field monitoring, which found that "the game involves several security, social, and behavioral risks." The government also expressed concerns that the game's content was "incompatible with social values and traditions." This move places Iraq among several Middle Eastern countries tightening regulations on online gaming and interactive platforms due to child safety and moral concerns.

Roblox Corp has contested the claims made by Iraqi authorities, stating that they are based on an outdated understanding of the platform. The company emphasized that safety is its top priority and expressed willingness to work with the Iraqi government to restore access. Earlier this year, Roblox had temporarily suspended certain communication features, including in-game chat, for users in Arabic-speaking countries, including Iraq. However, this preemptive measure appears to have been insufficient to allay the government's concerns. As the news of the ban spreads, investors seem to be reacting negatively, leading to the significant drop in Roblox's stock price.