Reuters is reporting that a group of Netflix shareholders is suing the company over its subscriber losses because Netflix had predicted gains during the first quarter. The company stated that it lost 700,000 subs in Rusia alone by dropping the service in reaction to its invasion of The Ukraine. Let me make that more clear to those who are not paying attention. Netflix cut service to an entire country overnight costing it 700,000 subscribers instantly. Do you know how many subscribers Netflix actually lost in the first quarter? 200,000. That means that in other markets Netflix gained subscribers. It gained so many subscribers outside of Russia that even with dropping 700,000 it made up 500,000 other places.
Did the loss of subscribers cost shareholders? Yes, it did. Well, buck up buttercup. Nobody guarantees that if you invest in the stock market that everything will always make more money than the quarter before. Apparently, shareholders want Netflix to explain ahead of time that if some kind of catastrophic event occurs it may hurt its performance or else. Here let me help you with that Netflix. In the event of an electromagnetic pulse that wipes out the entire power grid of Europe shareholders should expect to see a drop in European subscribers. If New York City and Las Angeles are destroyed in a massive bicoastal tsunami then Netflix may lose momentum on subscribers due to the deaths of millions of its current subs.
There you have been warned.
If these angry shareholders want to sue Netflix, there has to be evidence that the company knew that there were drastic subscriber losses outside of Russia that would amount to a major problem and then lied about it. The stock market goes up and down. I thought people who wear big boy pants knew that already. If you did not, maybe you should get a better investment advisor. Full disclosure, I myself do not own stock in Netflix or any other company. But I can read. And in each shareholder letter that is published, it ends with language explaining that the predictions for the future are speculative statements. They are not promises.
Watching the investor class try to sue over this is like watching a group try to file a suit against the 7-11 for selling lotto tickets that boast how much people could win. The stock market is always a gamble and Netflix has been a good bet for a decade. In a world where people spend money on digital pictures of monkeys I just can’t believe some have the gall.
