Netflix faces lawsuit from shareholders after subscriber losses
After suffering its first quarterly loss in subscribers in a decade, Netflix has now also been slammed with a shareholder lawsuit.
The streaming company has been sued in federal court for allegedly misleading investors about its slowdown in subscribers, according to Variety and The Hollywood Reporter.
In April, Netflix disclosed it lost 200,000 subscribers in the first quarter of 2022, leading its stock to fall. Prior to this disclosure, Netflix had forecast it would gain 2.5 million subscribers during that quarter and said its business had "remained healthy," though in January, the company said acquisition was "not growing quite as fast as we were perhaps hoping or forecasting."
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
But the shareholder lawsuit accuses Netflix of making "materially false and/or misleading statements" about its business operations and not disclosing 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 company's "wrongful acts and omissions" led shareholders to suffer "significant losses and damages," the lawsuit also claims.
Netflix blamed a variety of factors for its loss in subscribers, including password sharing, which it has pledged to crack down on. It has projected it will lose another two million subscribers in the current quarter. The day after the company disclosed the subscriber loss, shares fell 35 percent.
According to Reuters, the lawsuit is seeking damages for those who traded Netflix shares from October through April.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Brendan worked as a culture writer at The Week from 2018 to 2023, covering the entertainment industry, including film reviews, television recaps, awards season, the box office, major movie franchises and Hollywood gossip. He has written about film and television for outlets including Bloody Disgusting, Showbiz Cheat Sheet, Heavy and The Celebrity Cafe.
-
Why Bhutan hopes tourists will put a smile back on its face
Under The Radar The 'kingdom of happiness' is facing economic problems and unprecedented emigration
By Chas Newkey-Burden, The Week UK Published
-
7 beautiful towns to visit in Switzerland during the holidays
The Week Recommends Find bliss in these charming Swiss locales that blend the traditional with the modern
By Catherine Garcia, The Week US Published
-
The Week contest: Werewolf bill
Puzzles and Quizzes
By The Week US Published
-
US charges Indian tycoon with bribery, fraud
Speed Read Indian billionaire Gautam Adani has been indicted by US prosecutors for his role in a $265 million scheme to secure solar energy deals
By Peter Weber, The Week US Published
-
Boeing machinists approve contract, end strike
Speed Read The company's largest union approved the new contract offer, ending a seven-week strike
By Peter Weber, The Week US Published
-
US economy still strong in final preelection report
Speed Read It grew at a solid 2.8% annual rate from July through September
By Peter Weber, The Week US Published
-
Boeing machinists reject deal, continue strike
Speed Read The rejection came the same day Boeing reported a $6.2 billion quarterly loss
By Peter Weber, The Week US Published
-
Ports reopen after dockworkers halt strike
Speed Read The 36 ports that closed this week, from Maine to Texas, will start reopening today
By Peter Weber, The Week US Published
-
Empty-nest boomers aren't selling their big homes
Speed Read Most Americans 60 and older do not intend to move, according to a recent survey
By Peter Weber, The Week US Published
-
Brazil accuses Musk of 'disinformation campaign'
Speed Read A Brazilian Supreme Court judge has opened an inquiry into Elon Musk and X
By Rafi Schwartz, The Week US Published
-
Disney board fends off Peltz infiltration bid
Speed Read Disney CEO Bob Iger has defeated activist investor Nelson Peltz in a contentious proxy battle
By Rafi Schwartz, The Week US Published