Since reporting its first-quarter subscriber loss, Netflix’s market valuation has dropped by $60 billion. They also fired their marketing staff and several animated projects to save money. Now, as their price plummets and subscribers quit their subscriptions, Netflix is being sued by shareholders who claim the left-wing streaming business misled investors about its customer retention problems. They’ve requested class-action status in the hopes of attracting more Netflix stockholders
As David Ng reports:
The lawsuit, which was filed Tuesday in a northern California federal court, covers Netflix shareholders who bought the stock between October 19, 2021 and April 19, 2022 — a period during which the value of the stock plummeted a stunning 67 percent.
“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages,” the court filing states.
The suit, which is being brought by a trustee of an entity called the Imperium Irrevocable Trust, cited public statements made by Netflix during its most recent third and fourth quarter earnings reports in which the company painted an optimistic picture of subscriber growth.
But the truth was revealed last month when Netflix dropped a bombshell on its investors, reporting the company had lost 200,000 subscribers in the first quarter of 2022 and, worse yet, is expecting to lose a whopping 2 million more customers in the months ahead.
“As a result of these materially false and/or misleading statements, and/or failures to disclose, Netflix’s securities traded at artificially inflated prices during the Class Period,” the complaint reads.
“Plaintiff and other members of the Class purchased or otherwise acquired Netflix’s securities relying upon the integrity of the market price of the Company’s securities and market information relating to Netflix, and have been damaged thereby.”
Netflix’s financial prospects are so bleak that billionaire investor Bill Ackman recently sold 3.1 million shares for a reported loss of more than $400 million, claiming he has lost faith in his ability to forecast the streaming service’s future prospects.