Netflix Shareholders Sue The Streamer For Misleading Investors About Company Growth
Remember the character Eugene on "Hey Arnold!" who always had a positive outlook but spent nearly every episode having to endure the worst luck imaginable? That's, uh ... that's kind of how Netflix is looking these days.
Just two weeks ago, we reported on the streaming giant's loss of $54 billion in value overnight after failing to meet its subscriber growth numbers for the first time, which led to a number of high-profile company changes, show cancellations, and the destruction of their in-house editorial team, Tudum. This doesn't even begin to cover the anticipated 2 million subscribers they're projected to lose next quarter, which was likely the inspiration for the streamer to finally consider an ad-supported subscription tier. Well, Netflix is going to need all of the revenue streams it can get, because the company is being sued by its own shareholders.
Netflix's 'wrongful acts and omissions'
Shareholders allege that the company intentionally misled them by failing to report that "Netflix was exhibiting slower [customer] acquisition growth due to, among other things, account sharing by customers and increased competition from other streaming services." The lawsuit alleges that as a result of Netflix's "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."
Shout out to our friends over at Variety for doing the math and figuring out that, during the time period covered in the lawsuit, the streamer's stock dropped a whopping 67%, starting at a high of $691.69 per share on November 17, 2021, plummeting to $226.19 per share on April 20, 2022. As of publication, Netflix closed the day at $204.01, dropping even further.
Fiyyaz Pirani, a trustee of Imperium Irrevocable Trust is the lead plaintiff in the lawsuit, and I promise that Imperium Irrevocable Trust is a real funding organization and not the name of Darth Vader's bank. (Trust me, I checked.) Netflix as a company as well as co-CEOs Reed Hastings and Ted Sarandos are named as defendants, along with CFO Spencer Neumann. If the lawsuit makes its way all the way to a hearing, the big question will be which competing streamer will make the inevitable scammer docuseries about the company?
For anyone with a genuine interest in reading legal documents, the lawsuit case is Pirani v. Netflix Inc et al., with docket number 22-CV-02672, filed in the U.S. District Court for the Northern District of California. The plaintiffs are represented by Glancy Prongay & Murray, a firm that specializes in class-action lawsuits in the securities fraud arena, and an online forum is currently available for any additional Netflix shareholders who feel as though they've been had by the streamer.