(Reuters) – Netflix has defeated a lawsuit filed by shareholders in a federal court in California that accused the streaming entertainment company of hiding the extent to which account-sharing was hindering its growth.
A Texas-based investment trust sued in May 2022, after Netflix shares lost a third of their value when the company said subscribers were decreasing for the first time in a decade. The lawsuit sought damages on behalf of investors who bought Netflix shares between January 2021 and April 2022.
U.S. District Judge Jon Tigar ruled on Friday that the lawsuit included no evidence that the company was aware of the extent of the problem for as long as the investors alleged.
The judge said the investor can refile the lawsuit if it adds facts to bolster the claims.
A spokesperson for Netflix and attorneys for the trust did not immediately respond to requests for comment on Monday.
Netflix lost around half of its value between January 2022, when it warned of weak subscriber growth, and April, when shares plunged after the company said account-sharing and competition had hampered new subscriptions. Netflix’s then-CEO, Reed Hastings, said at the time that the COVID-19 pandemic had made it difficult for the company to interpret subscription trends.
Netflix shares were up 1.1% at $479.09 at midday on Monday.
(Reporting by Jody Godoy in New York; Editing by Matthew Lewis)
