Netflix secured a court victory on Tuesday as a shareholder lawsuit accusing the company of misleading investors about the impact of account sharing on subscriber growth was dismissed.
The lawsuit, led by Fiyyaz Pirani, trustee of Imperium Irrevocable Trust, claimed Netflix downplayed the challenges of account sharing, competition, and the Russian market exit, which the company cited after reporting its first subscriber loss in a decade in early 2022.
The lawsuit followed Netflix’s April 2022 disclosure of a 200,000-subscriber loss in the previous quarter and a forecast of a 2-million-subscriber drop in the next three months. The news caused Netflix shares to plummet by 35%, wiping out over $54 billion in market value.
U.S. District Judge Jon Tigar in Oakland, California, dismissed the case with prejudice, ruling that Netflix’s statements about its subscriber penetration and growth potential were not false or misleading. Tigar also found no evidence that Netflix concealed the effects of account sharing on growth, stating the company viewed it as just one of several potential challenges.
Netflix and its legal team, along with the plaintiff’s lawyers, did not immediately comment on the ruling. The dismissal prevents the plaintiff from filing another amended complaint.
