A class action complaint has been filed in the United States District Court, Northern District of California against Netflix and certain officers of the Company on behalf of purchasers of Netflix's common stock between July 22, 2014 and October 15, 2014, inclusive (the "Class"), alleging violations of the Securities Exchange Act of 1934 (the "Exchange Act").
The complaint alleges that the defendants made materially false and misleading statements and omissions during the Class Period in violation of the Exchange Act concerning Netflix's May 2014 price increase for monthly streaming subscriptions.
According to the complaint, on July 21, 2014 – more than two months after Netflix's price increase took effect – the Company's Chief Executive Officer and Chief Financial Officer told the market that the impact of Netflix's May 2014 price increase on subscriber growth had been "minimal" and had "no noticeable effect in the business." They also suggested that there would be no further impact, stating, "I think we've seen, really, the impact of the price change go through already, so it's pretty nominal." However, contrary to their statements, the defendants had allegedly already seen a marked decrease in subscriber growth due to the May 9 price increase, which was mostly concealed from the public by the positive impact of the June 6 release of a new season of a popular Netflix program.
The complaint further alleges that less than three months later, on October 15, 2014, the Company revealed that the impact of the price increase on subscriber growth had been hugely negative. In fact, Netflix's subscriber growth numbers were allegedly so low that this caused the defendants to slash their projected earnings by almost fifty percent. In an explanatory letter to shareholders dated October 15, 2014, the Company stated "[Y]ear on year net additions in the US were down (1.3 million in Q3 2013 to [less than] 1 million in Q3 2014). As best we can tell, the primary cause is the slightly higher prices we now have compared to a year ago." They also admitted that there had been a significant impact in Q2, which had been partially offset by the release of a new season of a popular program.
In response to this news, on October 16, 2014, Netflix's stock price plummeted from the prior day's closing price of $448.59 per share to close at $361.70 per share, a nearly 20% decline erasing more than $5 billion of the Company's market value in one day.
If you are a member of the proposed Class, you may move the court no later than May 1, 2017 to serve as a lead plaintiff for the purported Class. You need not seek to become a lead plaintiff in order to share in any possible recovery. If you would like to discuss the complaint or our investigation, please contact us by emailing firstname.lastname@example.org or by calling 800-290-1952.
This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.
Kaplan Fox & Kilsheimer LLP, with offices in New York, San Francisco, Los Angeles, Chicago and New Jersey, has many years of experience in prosecuting investor class actions. For more information about Kaplan Fox & Kilsheimer LLP, you may visit our website at www.kaplanfox.com. If you have any questions about this Notice, the action, your rights, or your interests, please contact:
Melinda D. Campbell
KAPLAN FOX & KILSHEIMER LLP
850 Third Avenue, 14th Floor
New York, New York 10022
Fax: (212) 687-7714
Laurence D. King
KAPLAN FOX & KILSHEIMER LLP
350 Sansome Street, Suite 400
San Francisco, California 94104
Fax: (415) 772-4707
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