Netflix (Nasdaq: NFLX) is facing a class action suit from a group of shareholders that say the company concealed negative subscription trends and put out false and misleading statements about its negotiations and contracts with content providers.
The investors, from the City of Royal Oak Retirement System, filed the suit in California federal court. It claims unnamed Netflix executives made "materially false and misleading" statements, withheld information about negotiations with content owners, and didn't disclose that some of its deals were short term ones that left the company with a "Hobbesian choice to renegotiate the contracts in 2011 at much higher rates or not renew them at all." The suit also alleges that Netflix didn't acknowledge that content providers were demanding much higher rates to renew contracts.
Netflix, which at one point last summer was trading above $300, currently is in the $90 range.
The suit alleges those unnamed executives and directors sold some 388,661 shares of common stock and pocketed more than $90 million.
Netflix CEO Reed Hastings, CFO David Wells, chief content officer Ted Sarandos, CMO Leslie Kilgore, and chief product officer Neil Hunt are named as defendants.
For more:
- see this The Wrap article
Related articles:
Netflix strikes deal with BBC for launch in UK, Ireland
Is Verizon talking with Netflix? Depends on who you ask
Hastings: Netflix was overconfident, and is worried about HBO
Netflix subscribers to get $1 back in DVD price abuse settlement
Is it time for Netflix CEO Reed Hastings to move on?