Netflix sued for ‘misleading market’
May 5, 2022
Netflix has received a shareholder lawsuit in the US accusing it of misleading the market about its ability to keep adding subscribers in recent months. Filed in San Francisco by a Texas investor, the suit seeks damages for declines in Netflix shares this year after the company missed its subscriber growth estimates.
The filing alleges top executives failed to disclose that its growth was slowing amid increased competition and that it was losing subscribers on a net basis.
Netflix shares dropped 20 per cent in January after it disclosed weak subscriber growth. Netflix shares then plunged more than 35 per cent in April after it disclosed it lost 200,000 subscribers in its first quarter, well short of its forecast of adding 2.5 million subscribers.
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.
According to Reuters the plaintiff is Fyyas Pirani, a Houston tech investor.
Netflix has yet to comment.