- Company Name
- Netflix, Inc.
- Stock Symbol
- Class Period
- April 17, 2019 to July 17, 2019
- Motion Deadline
- September 20, 2019
- Northern District of California
The complaint charges Netflix and certain of its officers with violations of the Securities Exchange Act of 1934. Netflix provides Internet entertainment services. It offers TV series, documentaries, and feature films across various genres and languages and provides members the ability to receive streaming content through a host of Internet-connected screens, including TVs, digital video players, television set-top boxes, and mobile devices.
The complaint alleges that throughout the Class Period, defendants made false and misleading statements and/or failed to disclose adverse facts regarding Netflix’s business and prospect. Specifically, contrary to defendants’ statements that the Company’s gross additions were not expected to be affected by the price increases they were implementing, Netflix would not be able to make its expected target of 5 million new subscribers for the second quarter of 2019 and would actually lose subscribers in the United States for the quarter. As a result of defendants’ false statements and omissions, Netflix securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of more than $380 per share.
Then on July 17, 2019, Netflix announced it had missed its forecast number for new subscribers. Instead of 5 million new subscribers, including .3 million in the United States and 4.7 million internationally, Netflix’s membership grew by only 2.7 million in the quarter, and in the United States Netflix had actually lost 126,000 subscribers. The Company stated that its “missed forecast was across all regions, but slightly more so in regions with price increases.” On this news, the price of Netflix shares fell $47.34 per share over the next two trading days, or more than 13%, to close at $315.10 per share on July 19, 2019.