A group of Netflix shareholders have filed a suit in a Calfornia court accusing the company of misleading the market about its ability to continue adding subscribers.
The lawsuit filed in San Francisco federal court seeks damages for declines in Netflix’s share price this year after the company missed its subscriber growth estimates.
Last month Netflix revealed it had lost 200,000 subscribers during the first quarter of 2022, and expects to lose a further two million in Q2.
According to Reuters, the lawsuit accuses Netflix, co-CEOs Reed Hastings and Ted Sarandos and CFO Spencer Neumann of “failing to disclose that its growth was slowing amid increased competition and that it was losing subscribers on a net basis”.
“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,” said the complaint. “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.”
It is led by a trustee of Imperium Irrevocable Trust and seeks to represent investors who bought shares in Netflix between 19th October 2021 and 19th April 2022.
Netflix has declined to comment.