It's been a rough couple of weeks for Netflix with things only set to get worse for the streaming platform, as one of its shareholders has now filed a lawsuit against the company.
Brought forward by Imperium Irrevocable Trust, the complaint was made to the US district court in California on May 3rd, 2022. It states that Netflix "mislead" investors by failing to "disclose material adverse facts" regarding its subscriber count. This relates to fact that Netflix lost 200,000 subscribers during the first three months of 2022.
A letter was sent to shareholders as part of Netflix's financial results for its third quarter, noting that it saw "positive effects of a stronger slate in the second half of the year" with Netflix chief financial officer Spencer Neumann also commenting that "the business remained healthy" throughout the period. This has now been looked upon as misleading by shareholders and it will now be settled in court.
The suit looks to address anyone who owned shares between October 19th, 2021 and April 19th, 2022.
“Specifically, Defendants failed to disclose to investors: (1) that Netflix was exhibiting slower acquisition growth due to, among other things, account sharing by customers and increased competition from other streaming services; (2) that the Company was experiencing difficulties retaining customers; (3) that, as a result of the foregoing, the Company was losing subscribers on a net basis; (4) that, as a result, the Company’s financial results were being adversely affected; and (5) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially false and/or misleading and/or lacked a reasonable basis." reads the filing (via Deadline (opens in new tab)).
"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."
Netflix's monetary issues have seen numerous of its original shows cancelled over the last few months, though that hasn't stopped Strangers Things from getting a $30 million budget per episode. This lawsuit also comes off the back of a new proposal from the British government that looks to change how streaming services are operated in the country and potentially beyond.
At the very least, Netflix did renew its surprise hit drama, Sweet Magnolias, for a rare third season.