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Netflix Subscriber Class Action Lawsuit Overview:
- Who: Fiyyaz Pirani filed a class action lawsuit against Netflix and three of its senior executives.
- Why: Pirani claims Netflix made false and misleading statements about the state of its business and failed to disclose important information to its investors.
- Where: The class action lawsuit was filed in California federal court.
Netflix failed to disclose to its investors that it was experiencing slowed acquisition growth and struggling with customer retention, a new class action lawsuit alleges.
Plaintiff Fiyyaz Pirani claims Netflix made materially false and/or misleading statements about its streaming service business in the run-up to the company’s stock price dropping significantly in April.
“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages,” the Netflix class action states.
Pirani claims that Netflix stock dipped around 21% in January after the streaming service revealed that it did not add as many subscribers during the fourth quarter of 2021 and that it was lowering its expectations for net subscriber adds during the first quarter of 2022.
Netflix Stock Drops 35% In April After Subscriber Loss Reveal, Class Action Claims
Netflix stock dropped an additional 35% in April, meanwhile, after the company revealed it had actually lost 200,000 subscribers during the first quarter of 2022, according to the Netflix class action.
Pirani claims Netflix withheld from investors that it was losing subscribers and that its “financial results were being adversely affected.”
“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,” the Netflix class action states.
Pirani claims Netflix is in violation of the Securities Exchange Act of 1934. He is demanding a jury trial and requesting compensatory damages for himself and all class members.
Pirani wants to represent a nationwide class of investors who purchased or otherwise acquired Netflix stock or sold put options for it between Oct. 19, 2021, and April 19, 2022.
A separate class action lawsuit was filed against Netflix in 2011 by a consumer claiming the company violated privacy laws by retaining former members’ rental history and video preferences.
Did you own Netflix stock during the class period? Let us know in the comments!
The plaintiffs are represented by Robert V. Prongay, Charles Linehan,and Pavithra Rajesh of Glancy Prongay & Murray LLP, and Frank R. Cruz of The Law Offices of Frank R. Cruz.
The Class Action Lawsuit is Pirani v. Netflix, Inc., et al., Case No. 3:22-cv-02672, in the U.S. District Court for the Northern District of California.
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