Tech

Netflix is ​​accused of lying about its subscriber count by its own investors

Investors have just filed a complaint against Netflix. These shareholders believe the streaming giant lied about its actual number of subscribers for several months. They assure that these lies are responsible for the collapse of the stock market.

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At the end of April 2022, Netflix announced the loss of 200,000 subscribers worldwide. Faced with stiff competition from Disney + and others, the streaming giant failed to achieve its results. The VOD service notably pointed the finger at account sharing, which would be responsible for the sharp rise in its prices.

Netflix’s stock plummeted following the announcement. The value of NFLX stock quickly lost 40% in the wake of the presentation of the results. $40 billion in valuation disappeared in a matter of days. Analysts have revised their projections for the coming years downwards.

Shareholders file lawsuit against Netflix after stock crash

The Netflix stock slump hit hard affected investors, especially those whose portfolio relies heavily on the performance of the streaming service. In a press release issued Tuesday, May 3, 2022, some of the shareholders accuse Netflix of knowingly hiding the actual number of subscribers.

Investors believe Netflix made statements “false and/or misleading” while hiding certain essential information concerning the financial health of the group. For shareholders, the streaming firm failed to admit that “subscriber acquisition growth was slowing, due to, among other things, account sharing among multiple customers and increased competition from other streaming services” and has been for several months.

On the same topic: Netflix cancels a new wave of series due to its massive loss of subscribers

However, US law obliges Netflix to communicate reliable information to its investors. This obligation is intended to enable shareholders to make informed investment decisions. Believing that the group broke the law, the shareholders filed a complaint in US courts.

The plaintiffs justify their complaint in particular by statements from Netflix dating from January 2022. The service then admitted to having overestimated the number of customers won in the fourth quarter of 2021. Netflix specified that only 8.3 million were added instead of the expected 8.5 million. For shareholders, Netflix executives wanted to calm things down by hiding the reduction in its subscriber base.

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