The lawsuit, which names Netflix CEO Reed Hastings and CFO Spencer Neumann as defendants, notes that the company projected 5 million net subscriber additions in its second quarter in an April letter to shareholders. The suit notes that Netflix executives pointed to a “strong slate of global content” in the second half of the year, and appeared to downplay the potential impact of price hikes for U.S. subscribers.
Filed on behalf of shareholder Johan Wallerstein, the lawsuit alleges that Netflix violated SEC regulations by making statements that were “materially false or misleading.” Netflix reported a net loss of 126,000 paid subscribers in the U.S. market and net additions of 2.83 million subscribers internationally.
“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 suit says.
Netflix shares fell about 1 percent in trading Tuesday. Company representatives did not immediately respond to a request for comment.
The company’s stock declined more than 10 percent after its second-quarter earnings report. With a decline on Tuesday, the company experienced its ninth straight daily decline, its longest such streak in five years.