Netflix Wins Lawsuit Over Subscriber Growth Forecasts

The loss was attributed to several factors, including account sharing, increased competition, and the shutdown of its service in Russia following the invasion of Ukraine.

New York: Netflix has successfully had a shareholder lawsuit dismissed on Tuesday, following allegations that the streaming company had downplayed the impact of account sharing on its subscriber growth. The lawsuit, filed by a Texas-based trustee, accused Netflix of misleading investors about the potential consequences of users sharing usernames and passwords with nonpaying members in other households.

The class action suit stemmed from Netflix’s April 2022 announcement, when the company revealed a loss of 200,000 subscribers in the previous quarter, marking the first decline in a decade. Netflix also warned of the possibility of losing an additional 2 million subscribers in the subsequent three months. The loss was attributed to several factors, including account sharing, increased competition, and the shutdown of its service in Russia following the invasion of Ukraine. Following the announcement, Netflix’s shares dropped 35%, erasing more than $54 billion in market value.

U.S. District Judge Jon Tigar, based in Oakland, California, ruled that Netflix’s previous claims—that it was “roughly 60% penetrated” in the United States and Canada, with “a lot of headroom” to grow—were not false or misleading. Tigar determined that these statements referred to paid subscribers and did not imply guaranteed future growth.

Furthermore, Judge Tigar found no evidence that Netflix had hidden any information or made determinations suggesting that account sharing would significantly impede growth. At best, the plaintiff’s allegations only suggested that Netflix had investigated account sharing as one of many factors that could potentially affect subscriber growth.

Also Read | Rare Pudu Fawn’s Birth in Argentina Sparks Conservation Hopes

The dismissal of the case, which follows a previous dismissal of an earlier version in January, was with prejudice, meaning the plaintiff, Fiyyaz Pirani, trustee of the Imperium Irrevocable Trust, cannot amend or refile the complaint.

The case is Pirani v. Netflix Inc et al, U.S. District Court, Northern District of California, No. 22-02672.

Also Read | European Commission Gives Green Light to Italy’s €8.7 Billion Payment Request

Recent News

Turkey Slams Opposition’s Shopping Boycott as ‘Economic Sabotage’

Ankara: Turkey's government has strongly condemned opposition-led calls for a nationwide commercial boycott following the arrest of Istanbul Mayor Ekrem Imamoglu, branding the move...

Israel Expands Military Operations in Gaza, Seizing Territory

Jerusalem: Israel has announced a significant escalation of its military operations in Gaza, declaring plans to seize large sections of the enclave and incorporate...

Celebrating Differences: Why Caregiver Inclusion and Classroom Reform Matter This April

Mumbai, India: As April marks Autism Awareness and Acceptance Month, the spotlight turns toward the increasing need for inclusive policies, early intervention, and caregiver...

Uber Launches ‘Uber for Teens’ in Kolkata

Kolkata: Uber today announced the launch of Uber for Teens, a product designed to provide safe, reliable, and convenient transportation solutions specifically tailored for...