Netflix shareholders sue over subscription slump disclosures

div classBodysc17zpet90 cdBBJodivpBy Jody Godoyp

pReuters – Netflix Inc has been hit with a shareholder lawsuit in a U.S. court in California accusing the streaming entertainment company of misleading the market about its ability to keep adding subscribers in recent months.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pThe lawsuit filed in San Francisco federal court on Tuesday seeks damages for declines in Netflixs share price this year after the company missed its subscriber growth estimates.p

pFiled by a Texasbased investment trust, the lawsuit accused Los Gatos, Californiabased Netflix and its top executives of failing to disclose that its growth was slowing amid increased competition and that it was losing subscribers on a net basis.p

pNetflix shares dropped 20 in January after it disclosed weak subscriber growth. Netflix shares then plunged more than 35 on April 20 to close at 226.19 after it said it lost 200,000 subscribers in its first quarter, falling well short of its forecast of adding 2.5 million subscribers. Its shares were trading at 199.87 at midday on Wednesday. p

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

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

pThe lawsuit names Netflix CoChief Executives Reed Hastings and Ted Sarandos and Chief Financial Officer Spencer Neumann. It seeks damages for investors who traded Netflix shares between Oct. 19, 2021 and April 19, 2022.p

pThe case is Pirani v. Netflix Inc et al., No. 22cv02672, U.S. District Court, Northern District of California.p

p

pp Reporting by Jody Godoy in New York Editing by Will Dunhamp

divdivdiv classBodysc17zpet90 cdBBJodivdivdiv