Investors sue Netflix after losing subscribers.
A number of shareholders filed a lawsuit against the streaming platform, Netflix, accusing it of deceiving them about the decrease in the number of subscribers to it, which is the news that caused the drop in its share price.
These investors noted, in a statement published Tuesday, that the California-based group had made “false and/or misleading” statements and withheld certain information.
Investors on the platform in particular took aim at not clarifying that “the slowdown in the growth of the number of subscribers is due, among other reasons, to the sharing of accounts among a number of customers, and to the increase in competition from other broadcasting platforms.”
Netflix announced, on April 19, that it had lost two hundred thousand subscribers worldwide, in the first quarter of the year, compared to the end of 2021, which is a precedent for more than ten years.
The lawyers who filed the class action lawsuit on behalf of the investors reminded that the share price fell “more than 35%, to settle at $226.19 on April 20.”
The broadcasting giant, which expects to lose more subscribers in the spring, has planned to tighten the screws on the sharing of IDs and passwords, allowing many people not to pay for access to the platform.
Netflix intends to adopt a strict policy on account sharing on its network, which used to allow many to benefit from the service for free. And Netflix announced, in early March, that it will conduct tests in South American countries to impose a financial allowance on its customers if they want to add additional profiles to their accounts.
But it expected to gain 2.5 million additional subscribers in the first quarter, while analysts were expecting a larger number, which caused the shock of losing some of them.
The loss was partly caused by the suspension of service in Russia after the invasion of Ukraine. On April 19, the group clarified that the suspension of its services in Russia after its invasion of Ukraine led to a net loss of 700,000 subscriptions. “Otherwise, we would have had 500,000 more subscriptions” compared to the previous quarter, she added.
The total number of subscriptions to the platform reached 221.64 million.