Disgruntled Netflix shareholders sued over subscription disclosures
What just happened? A group of Netflix shareholders have filed a lawsuit against the streaming giant, accusing the company of misleading investors because it is due to a slowdown in subscriber growth. The lawsuit, filed by a Texas-based investment fund in San Francisco federal court on Tuesday, seeks damages after Netflix’s share price plummeted.
“As a result of Defendants’ misconduct and inaction, as well as a sharp decline in the market value of the Company’s securities, Claimant and other members of the group suffered significant losses and damages,” the complaint says.
Image credit DKL 650
Suit goals on the recovery of losses from investors who traded shares between October 19, 2021 and April 19, 2022.
In April, Netflix announced the loss of 200,000 subscribers in the first quarter, the first quarterly loss in a decade. The company attributed the loss to a combination of inflation, competition from competing streaming services, and exit from the Russian market.
Netflix has warned that it could lose another two million subscribers in the second quarter.
Since the beginning of the year, Netflix shares have lost more than 68% of their value. The shares are currently trading at $189.82, up from $597.37 at the start of 2022.
Netflix said in its latest earnings report that it was open to the possibility of adding an ad-supported tier, and just over a week later, the company laid off most of the staff running its fansite. On the other hand, the first part of the fourth season of the hit series Stranger Things is due out later this month. The second volume will be released in five weeks, on July 1st.