Netflix has been sued by shareholders who suffered significant losses and damages for lying about the company’s growth and its failure to retain subscribers.
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Netflix shareholders filed a lawsuit on Wednesday, accusing the streaming service’s management of deception by giving inaccurate subscriber growth expectations, which caused the stock price to plummet.
The lawsuit, filed in San Francisco, claims that the streaming service neglected to disclose that it is “losing subscribers on a net basis.” Plaintiffs claim to “have suffered significant losses and damages” because they were unaware of Netflix’s failure to retain subscribers.
The allegedly misled investors feel that the world’s largest streaming service is on the decline, owing to client account sharing and growing competition from other streaming services.
Netflix announced last month that it had lost roughly 200,000 subscribers in the first quarter of 2022, with another two million expected to leave in the coming months. As a result, the company’s stock plunged by 25% within hours of trading. Netflix’s market capitalization has plummeted by 40% this year.
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Netflix executives have been compelled to contemplate developing more cheap subscription tiers by offering an ad-supported version of the streaming platform as a result of the company’s extraordinary value drop.
On March 6, Netflix announced that it would leave the Russian market due to Moscow’s military action in Ukraine. While the corporation has added 500,000 new members in other countries this year, the loss of 700,000 users in Russia has caused considerable challenges for the American entertainment conglomerate.