After suffering its first quarterly loss in subscribers in a decade, Netflix has now also been slammed with a shareholder lawsuit.
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.
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.
Create an account with the same email registered to your subscription to unlock access.