In a federal court case in California, shareholders sued Netflix (NFLX.O.), alleging that the streaming entertainment business concealed how much account-sharing was impeding its expansion. The claim was successfully dismissed.
In May 2022, an investment trust in Texas filed a lawsuit after Netflix announced that its subscriber base was declining for the first time in ten years, causing its shares to plummet by one-third. The complaint requested damages on behalf of investors who purchased Netflix shares between January 2021 and April 2022.
According to U.S. District Judge Jon Tigar’s ruling on Friday, the case had no proof that the business knew the full scope of the issue for as long as the investors claimed.
The judge said the investor may resubmit the complaint, provided it includes new evidence to support its allegations. A Netflix representative and the trust’s attorneys did not immediately respond to requests for information on Monday.
Between January 2022, when the firm warned of sluggish subscriber growth, and April, when shares fell after the company announced account-sharing and competition had slowed new subscribers, Netflix lost around half of its value. Reed Hastings, CEO of Netflix at the time, claimed that the COVID-19 epidemic had made it challenging for the firm to analyze subscriber patterns. At lunchtime on Monday, Netflix’s shares were up 1.1% at $479.09.