Netflix hit by shareholder lawsuit over falling stock price

Netflix wasn’t the only one losing huge amounts of money and these people are so angry at the streaming company they are suing.

If Netflix thought the worst of its problems were behind it and it could continue to rebuild, it needs to think again.

The streaming company was hit this week by a class action lawsuit from angry investors who accused Netflix of misleading them about its many challenges.

The lawsuit filed by the shareholders stated, “As a result of (Netflix’s) wrongful acts and omissions, plaintiff and other class members suffered substantial losses and damages.”

At the heart of the lawsuit is the accusation that Netflix executives told the market that its business fundamentals were strong and that they expected continued growth when the opposite was true.

The lawsuit argued that Netflix’s “materially false and/or misleading statements and/or failure to disclose” caused them to buy Netflix stock based on the perception that the company was in a stronger position than she wasn’t.

If they had known the true state of affairs, they would never have purchased the shares and would have suffered financial losses afterwards.

The lawsuit seeks to represent anyone who purchased Netflix stock between October 19, 2021, when its stock price closed at $636, and April 19, 2022, the day before the premier’s disastrous financial results were announced. quarter of Netflix.

On April 19, Netflix stock price closed at $348. By the end of the next day, it had suffered a dizzying drop to $226. It currently sits at an even worse price of US$188. The difference between the stock price on October 19 and now represents a 70% loss in Netflix’s market value.

Its current market cap is $83.6 billion.

The start of the pursuit period came when Netflix revealed its third quarter 2021 results. At the time, its chief financial officer, Spencer Neumann, said on an investor call: “Throughout the quarter, the business remained healthy as it had been throughout the year with churn at low levels.”

According to The Hollywood Reporter, Neumann added that “healthy retention” should continue. In January 2022, Netflix corrected its forecast and said it planned to add 200,000 fewer subscribers than it had originally planned, but acquisitions continued to grow.

On April 20, Netflix revealed in its first quarter results that it had not missed its subscriber forecasts, he posted a net loss of 200,000 subscribersthe first time in a decade that its membership had shrunk.

Netflix also predicted it would lose an additional 2.5 million subscribers in the three months to June 30.

The streaming company blamed a combination of the conflict in Ukraine – it suspended 700,000 accounts in Russia – and macroeconomic factors as well as competition from rivals and password sharing.

Netflix’s financial woes and falling value drove the company take a series of actions.

Founder and co-CEO Reed Hastings has signaled that Netflix will introduce a cheaper, ad-supported membership tier to attract new subscribers, a move he previously ruled out.

Netflix also signaled it would crack down on password sharing, a practice it says leads to missed revenue opportunities. He said 100 million of his 222 million accounts shared their passwords beyond their homes.

In the aftermath of its financial results, the company has already taken steps to cut costs, canceling a list of projects, some of which were in production, such as Meghan Markle’s animated series. pearl, by Steve Carell space force and the film produced by Michael B. Jordan Raising Dion.

This too left his head of animation as well as several staff members, and cut employees from its editorial arm, Tudum.

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