Netflix Sued By Shareholders After Losing Subscribers
The streaming service faces further complications after a lackluster Q1 performance.
Netflix shareholders have filed a lawsuit on Tuesday against the streaming giant for allegedly downplaying the impact of account sharing, increased competition, and difficulties retaining subscribers. Reuters was first to report.
In mid-April, Netflix notified shareholders that its revenue growth has "slowed considerably" during Q1 2022, as 200,000 global subscribers have unsubscribed from the service. Netflix at that time also predicted it might lose as many as 2 million subscribers during Q2. The report had the further knock-on effect of sending Netflix's stock spiraling, and sparking widespread speculation that the streaming service may no longer be a market leader.
In a new lawsuit, shareholders are seeking damages for dramatic declines in the stock after missing its subscriber growth targets. The shareholders allege that they were intentionally misled about Netflix, via its overly sunny optimism. The complaint reads: "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."
As of this writing, A Netflix spokesperson has not offered a comment.
Although Netflix has tons of highly-anticipated content right around the corner for this year, it's plausible that Season 4 of Stranger Things (May 27), Season 5 of The Crown (November 2022), and Sandman (2022) won't be enough to combat these losses and turn the tide. In April, Netflix added a new "two thumbs up" option for rating content earlier this month, but that hardly makes the service more enticing in the face of recent price hikes announced in January. The streaming service has also indicated it may also offer an ad-based tier in the future.
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