Popular streaming service Netflix has found itself in hot water after allegedly making false and misleading statements regarding its recent subscriber growth.
Netflix investors have issued a class-action lawsuit against the company due to alleged misrepresentations as to declining subscriber growth since October 2021. Despite a surge in popularity during the peak of COVID, Netflix has struggled to retain subscribers going into 2022. According to investors, Netflix failed to accurately account for slower subscriber growth. Initially, Netflix had announced a loss of 200,000 subscribers due to inflation, the war in Ukraine, increased competition from other streaming services, and password sharing. However, despite these concerns, Netflix predicted a net inflow of 2.5 million subscribers but has seen a further decline of 2 million subscribers in the second quarter of 2022. This substantial decrease saw Netflix’s share price collapse approximately 75% in 5 months, costing the company hundreds of billions of dollars.
As such, investors argued that Netflix wilfully mislead shareholders about subscriber decline and issued false statements about the company’s prospects. This resulted in heavy financial damage, harmed business reputation, and caused investors great losses. The lawsuit is seeking an unspecified amount of damages for investors who suffered financial losses between 19 October 2021 and 19 April 2022.
Additionally, a Russian law firm is set to institute proceedings against Netflix for its refusal to provide its services in Russia following the Ukraine war.