Netflix has been sued by a shareholder in US court in California accusing the streaming entertainment company of misleading the market about its ability to continue adding subscribers in recent months.
The lawsuit filed Tuesday in federal court in San Francisco seeks damages for Netflix’s declining share price this year after the company missed its subscriber growth estimates.
Filed by a Texas-based investment fund, the lawsuit accused Los Gatos, Calif.-based Netflix and its top executives of failing to disclose that its growth was slowing amid increased competition and losing revenue. subscribers on a net basis.
Shares of Netflix fell 20% in January after reporting weak subscriber growth. Shares of Netflix then plunged more than 35% on April 20 to close at $226.19 (about Rs.17,200) after it said it lost 200,000 subscribers in the first quarter, well below its forecast to add more 2.5 million subscribers. Its shares were trading at $199.87 (about 15,246 rupees) as of midday on Wednesday.
The company attributed 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.
A Netflix spokesperson did not immediately respond to a request for comment.
The lawsuit names Netflix co-chief executives Reed Hastings and Ted Sarandos and chief financial officer Spencer Neumann. He is seeking damages from investors who traded Netflix stock between October 19, 2021 and April 19, 2022.
The case is Pirani v. Netflix et al., No. 22-cv-02672, US District Court, Northern District of California.
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