Netflix sued by shareholders following subscriber loss
Netflix shareholders filed a class-action lawsuit against the company on Wednesday, alleging executives committed securities fraud by issuing misleading guidance about the company's slowed subscriber growth.
Why it matters: Netflix has lost more than $200 billion in market value after it reported its first subscriber loss in a decade during its first-quarter earnings results last month.
Details: The lawsuit, filed in San Francisco, argues Netflix failed to disclose to investors that it was "exhibiting slower acquisition growth due to, among other things, account sharing by customers and increased competition from other streaming services."
- The lawsuit alleges that the company failed to disclose that it was "experiencing difficulties retaining customers" and as a result "was losing subscribers on a net basis."
- Shareholders argue that as a result of failing to disclose such information, they "have suffered significant losses and damages."
- Netflix declined Axios' request for comment.
Yes, but: Netflix did disclose in January during its fourth-quarter earnings call that it forecast slowed user growth for the first quarter of 2022.
- Its stock plunged nearly 20% in after-hours trading as a result.