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Netflix shareholders sue over revelations about subscription decline



(Reuters) – Netflix Inc. has been hit by a shareholder lawsuit in a U.S. court in California accusing the streaming entertainment company of misleading the market about its ability to continue adding subscribers in recent months.

The lawsuit filed in San Francisco’s federal court on Tuesday is seeking damages for declines in Netflix’s stock price this year after the company missed its estimates of subscriber growth.

The lawsuit, filed by a Texas-based investment fund, accused Los Gatos, California-based Netflix and its top executives of failing to reveal that its growth slowed in increasing competition and that they lost net subscribers.

Netflix shares fell 20% in January after revealing weak subscriber growth. Netflix shares then fell more than 35% on April 20 to close at $ 226.1

9 after saying they lost 200,000 subscribers in their first quarter, well below the forecast to add 2.5 million subscribers. Its shares traded at $ 199.87 at noon on Wednesday.

The company attributed the quarterly decline to inflation, competition from other streaming services and its shutdown of the service in Russia following the Russian invasion of Ukraine, which cost Netflix 700,000 members.

A Netflix spokesperson did not immediately respond to a request for comment.

The trial names Netflix co-chiefs Reed Hastings and Ted Sarandos and Chief Financial Officer Spencer Neumann. It claims damages for investors who traded Netflix shares between October 19, 2021 and April 19, 2022.

The case is Pirani v. Netflix Inc. et al.no. 22-cv-02672, U.S. District Court, Northern District of California.


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