- Netflix is being sued by its shareholders in California, accusing the company of misleading the market about its ability to keep adding subscribers in recent months
- The lawsuit was filed in San Francisco federal court on Tuesday, seeking damages for Netflix’s share price decline after it missed its subscriber growth estimates
- Netflix shares on NASDAQ dropped 20 per cent in January after it disclosed weak subscriber growth
- The company points the quarterly decline to inflation, competition from other streaming services and its suspension of service in Russia following the Russian invasion of Ukraine, which cost Netflix 700,000 members
Netflix has been hit with a shareholder lawsuit in California, accusing the streaming entertainment company of misleading the market about its ability to keep adding subscribers in recent months.
The lawsuit was filed in San Francisco federal court on Tuesday, seeking damages for declines in Netflix’s share price this year after the company missed its subscriber growth estimates.
Filed by a Texas-based investment trust, the lawsuit accused Los Gatos, California-based Netflix and its top executives of failing to disclose that its growth was slowing amid increased competition and that it was losing subscribers on a net basis.
Netflix shares on NASDAQ dropped 20 per cent in January after it disclosed weak subscriber growth.
Its shares then plunged more than 35 per cent on April 20 to close at US$226.19 (A$312) after it said it lost 200,000 subscribers in its first quarter, falling well short of its forecast of adding 2.5 million subscribers.
The company pointed the quarterly decline to inflation, competition from other streaming services and its suspension of service in Russia following the Russian invasion of Ukraine, which cost Netflix 700,000 members.
The lawsuit names Netflix Co-CEOs Reed Hastings and Ted Sarandos, and Chief Financial Officer Spencer Neumann.
It seeks damages for investors who traded Netflix shares between October 19, 2021 and April 19.
Netflix shares last traded at US$204.01 on NASDAQ.