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Netflix, Inc.

Case Details

Class Period: October 19, 2021 - April 19, 2022
Date Filed: May 03, 2022
Case Number: 3:22cv02672
Jurisdiction: California Northern District Court
icon-casetype Case Type: Securities Case
Days Left to
Seek Plaintiff:
50

Case Summary

On January 20, 2022, after the market closed, Netflix reported that it slightly over-forecasted paid net adds in Q4, adding 8.3 million subscribers compared to the 8.5 million forecast. The Company also stated that, despite healthy retention and engagement, it only expected to add 2.5 million net subscribers during first quarter 2022, below the 4.0 million net adds in the prior year period. On this news, the Company’s stock price fell $110.75, or 21.7%, to close at $397.50 per share on January 21, 2022, on unusually heavy trading volume. Then, on April 19, 2022, after the market closed, Netflix reported that it lost 200,000 subscribers during the first quarter of 2022, compared to prior guidance expecting the Company to add 2.5 million net subscribers. The Company cited the slowing revenue growth to four factors, including account sharing with an estimated 100 million additional households and competition with other streaming services. On this news, the Company’s share price fell $122.42, or over 35%, to close at $226.19 per share on April 20, 2022, on unusually heavy trading volume. The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Netflix was exhibiting slower acquisition growth due to, among other things, account sharing by customers and increased competition from other streaming services; (2) that the Company was experiencing difficulties retaining customers; (3) that, as a result of the foregoing, the Company was losing subscribers on a net basis; (4) that, as a result, the Company’s financial results were being adversely affected; and (5) that, as a result of the foregoing, Defendants positive statements about the Company’s business, operations, and prospects were materially false and/or misleading and/or lacked a reasonable basis.

Documents
Complaint