Netflix is getting sued by some of its shareholders, who claim that it withheld the fact that it was losing subscribers.
See, in its most recent quarterly report, Netflix said it was losing subscribers for the first time in a long time, and it was because of people sharing passwords and an increase in competition. But shareholders are saying that this is the first time it’s totally clear to them what’s happening and that Netflix knew these things were going to be a problem back in 2021 when share prices were higher but never told them.
The lawsuit says that Netflix broke securities laws by giving shareholders “materially false and/or misleading statements” and because it “failed to disclose material adverse facts about the company’s business, operations and prospects.”
“Our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds,” wrote Netflix in its letter to shareholders in April.