Netflix just can’t seem to catch a break. The streaming platform giant recently revealed that it was in some financial trouble, as some 200,000 subscribers decided to do away with the service altogether. Not to mention the massive amount of money lost that stems from those subscribers getting rid of their memberships. It had also been revealed that the stock for the company took a hit too, as it has been down 40 points since the beginning of the year. That is certainly never good for any company. Now it appears as if the streamer is being sued as it “made materially false and/or misleading statements.”
A class-action lawsuit has been devised by the law office of Glancy Prongay & Murray LLP. This lawsuit involves many investors who lost a ridiculous amount of money due to the massive drop in subscribers and monetary gains from the 40-point drop in stock prices. The stock was at $348.61 per share but has since plummeted to $226.19 per share. Netflix had apparently “over-forecasted” some of their gains in new memberships. However, when the quarterly reports came out, they were down some 200,000 subscribers. This number is based on the 2.5 million additions that have also happened. This lower number could be because the streaming giant decided to halt all its services in Russia, which was a staggering 700,000 memberships lost. Things are not looking so good for a company that has also announced price increases.
The class-action lawsuit also states that Netflix withheld critical information about the company’s business, operations, and prospects. This could have been their way of trying to hide the fact that it overcompensated for 2022 goals, and led it to hide the fact that it lost so many subscribers. The news of these lost subscribers was the cause of the rampant stock price drop, and things might get a lot worse for the company soon. Netflix is also revamping its pricing model once again, and it will be upwards of almost $20 per month for those who are wanting the UltraHD package. Should the company continue down this path, it might lose much more than 200,000 subscribers in four months’ time.
Any investors who happen to have purchased common stock or call options or sold put options from October 2021 to April 2022 are being asked to contact the law firm handling the case, so this class-action lawsuit can continue. The lawsuit, if won, promises to provide compensatory damages for damage sustained due to Netflix withholding or not disclosing that crucial information that would have seen plenty sell their stock when it was at its highest point. Buying stock in any company is a bit like gambling, so “buyer beware,” as they say.
Netflix has also axed plenty of new shows and cut down their animation projects by a lot due to the money being lost from this news of massive losses to subscribers. Who knows what is going to happen,? However, the streaming company will need to figure out some options fast, or it stands to lose far more money and memberships. Especially considering some fan-favorite shows have been canceled in lieu of this overcompensation of 2022 goals.