Shareholders sue Netflix for falling subscriptions

Netflix faces a class action lawsuit in a US court, filed by shareholders of the company.

The plaintiffs charge that the company has misled the market about its ability to continue to attract subscribers in recent months.

Shareholders accuse Netflix of lying about its growth

The demand was filed in federal court in San Francisco by a Texas-based investment trust, accusing Netflix and its top executives of failing to disclose that its growth was slowing amid increased competition and that it was steadily losing subscribers. net, according to the report published by Reuters.

The indictment directly names Netflix co-CEOs Reed Hastings and Ted Sarandos, along with CFO Spencer Neumann.

This lawsuit seeks damages for investors who traded Netflix shares between October 19, 2021 and April 19, 2022, a period covered by growth projections that were not close to reality.

For the first quarter of this year, Netflix was forecast to add 2.5 million subscribers. However, the panorama was radically opposite.

Netflix shares fell 20% in January after weak growth in its subscriber base was revealed. Subsequently, the shares of the streaming platform plummeted more than 35%, after the company recognized the flight of 200,000 subscribers in the first quarter of the year.

At the time, the company attributed the quarterly drop to inflation, competition from other streaming services and the suspension of its service in Russia, following the invasion of Ukraine, which cost Netflix the loss of 700,000 subscribers.

Obviously, the last few years have been difficult for Netflix. From being the benchmark —and the only option in some parts of the world—, this platform became part of a market with strong competitors, such as Disney +, Amazon Prime Video, HBO Max and Apple TV +, among other alternatives. However, to overcome the pressure of this dynamic medium, the company based in Los Gatos, California, a cheaper plan with advertising and the addition of new mobile games.

Regarding the recent lawsuit, Netflix has not responded to press inquiries.