Netflix Is Being Sued By Shareholders Over Its 200,000 Subscriber Loss
Netflix might want to consider putting all those Stranger Things kids to work selling candy bars or hosting a weekend-long charity car wash – anything to make back some of the alleged millions they blew on the latest episodes of Stranger Things. Because there’s been a recent development in Netflix’s ongoing business drama, and it’s one that could find Netflix tied up with some very expensive legal bills for a while. Every Netflix subscriber just braced themselves for an email notification informing them that the monthly rate just jumped to $250 a month, and a request that you consider making a generous donation to the good people at Netflix on top of that. Please? They’ll send you a stylish tote bag! Maybe. That’s if they have time in between fighting their shareholders in court and general panicking.
Last month, it was revealed that Netflix lost 200,000 subscribers (they reportedly have 221.64 million subscribers) and could potentially see a 2 million drop in subscribers in the next quarter, which was almost immediately followed by reports of mass firings and cancellations of original projects. Netflix hadn’t reported a viewer loss since 2011, so that wasn’t great news, and likely had co-CEO Ted Sarandos nervously asking everyone around him if it felt hotter in here (“It feels hotter, right? Jesus, I’m sweating so bad, someone bring me in a fan or two“). According to The Hollywood Reporter, Netflix shareholders filed a lawsuit against the company, alleging fraud.
In a complaint filed Tuesday in California federal court, investors sued the streamer for being overly optimistic about its business prospects by misleading them about losing subscribers. “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,” reads the complaint.
Netflix claimed that the loss was a result of several factors, like the economy, competition from other streaming services, and the war in Ukraine. Investors who bought shares between October 2021 and April 2022 are represented in the lawsuit. They claim that at the beginning of the period covered, Netflix allegedly announced third-quarter financial results with great optimism, and that alter on a conference call, Netflix spoke of the business remaining “healthy.” So basically, everything sounded good, if you were the type of person who wanted to buy a bunch of Netflix shares. But then Netflix announced the subscriber loss and shares fell by roughly 21%.
Netflix declined to comment on the lawsuit. But I just don’t understand why they weren’t honest in the first place? They should hire Netflix’s best employee Nicole Byer (it’s the least they can do after that time they erased her face from a Nailed It! thumbnail) and let her host every quarterly report meeting. She can cheerfully explain that it’s not 2013 anymore and that there are roughly twelve-point-twelve million streaming subscription services out there now, before passively shrugging until everyone leaves the room.
Pic: Netflix