Case 3:22-cv-02672 Document 1 Filed 05/03/22 Page 1 of 23
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`Robert V. Prongay (SBN 270796)
` rprongay@glancylaw.com
`Charles H. Linehan (SBN 307439)
` clinehan@glancylaw.com
`Pavithra Rajesh (SBN 323055)
` prajesh@glancylaw.com
`GLANCY PRONGAY & MURRAY LLP
`1925 Century Park East, Suite 2100
`Los Angeles, California 90067
`Telephone: (310) 201-9150
`Facsimile: (310) 201-9160
`
`Attorneys for Plaintiff
`
`[Additional Counsel on Signature Page]
`
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`FIYYAZ PIRANI, as TRUSTEE OF
`IMPERIUM IRREVOCABLE TRUST,
`Individually and on Behalf of All Others
`Similarly Situated,
`
`
`Plaintiff,
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`NETFLIX, INC., REED HASTINGS, TED
`SARANDOS, and SPENCER NEUMANN,
`
`
`v.
`
`Defendants.
`
` Case No.
`
`CLASS ACTION COMPLAINT FOR
`VIOLATIONS OF THE FEDERAL
`SECURITIES LAWS
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`DEMAND FOR JURY TRIAL
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`CLASS ACTION COMPLAINT
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`Case 3:22-cv-02672 Document 1 Filed 05/03/22 Page 2 of 23
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`Plaintiff Fiyyaz Pirani, as Trustee of Imperium Irrevocable Trust, (“Plaintiff”) individually
`and on behalf of all others similarly situated, by and through his attorneys, alleges the following
`upon information and belief, except as to those allegations concerning Plaintiff, which are alleged
`upon personal knowledge. Plaintiff’s information and belief is based upon, among other things, his
`counsel’s investigation, which includes without limitation: (a) review and analysis of regulatory
`filings made by Netflix, Inc. (“Netflix” or the “Company”) with the United States (“U.S.”) Securities
`and Exchange Commission (“SEC”); (b) review and analysis of press releases and media reports
`issued by and disseminated by Netflix; and (c) review of other publicly available information
`concerning Netflix.
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`NATURE OF THE ACTION AND OVERVIEW
`1.
`This is a class action on behalf of persons and entities that purchased or otherwise
`acquired Netflix common stock or call options, or sold put options, between October 19, 2021 and
`April 19, 2022, inclusive (the “Class Period”). Plaintiff pursues claims against the Defendants under
`the Securities Exchange Act of 1934 (the “Exchange Act”).
`2.
`Netflix primarily operates an entertainment platform that offers TV series,
`documentaries, feature films, and mobile games across a variety of genres and languages. It also
`offers a DVD-by-mail service in the U.S.
`3.
`On January 20, 2022, after the market closed, Netflix reported that it “slightly over-
`forecasted paid net adds in Q4,” adding 8.3 million subscribers compared to the 8.5 million forecast.
`The Company also stated that, despite “healthy” retention and engagement, it only expected to add
`2.5 million net subscribers during first quarter 2022, below the 4.0 million net adds in the prior year
`period.
`4.
`On this news, the Company’s stock price fell $110.75, or 21.7%, to close at $397.50
`per share on January 21, 2022, on unusually heavy trading volume.
`5.
`On April 19, 2022, after the market closed, Netflix reported that it lost 200,000
`subscribers during the first quarter of 2022, compared to prior guidance expecting the Company to
`add 2.5 million net subscribers. The Company cited the slowing revenue growth to four factors,
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`Case 3:22-cv-02672 Document 1 Filed 05/03/22 Page 3 of 23
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`including account sharing with an estimated 100 million additional households and competition with
`other streaming services.
`6.
`On this news, the Company’s share price fell $122.42, or over 35%, to close at
`$226.19 per share on April 20, 2022, on unusually heavy trading volume.
`7.
`Throughout the Class Period, Defendants made materially false and/or misleading
`statements, as well as failed to disclose material adverse facts about the Company’s business,
`operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Netflix
`was exhibiting slower acquisition growth due to, among other things, account sharing by customers
`and increased competition from other streaming services; (2) that the Company was experiencing
`difficulties retaining customers; (3) that, as a result of the foregoing, the Company was losing
`subscribers on a net basis; (4) that, as a result, the Company’s financial results were being adversely
`affected; and (5) that, as a result of the foregoing, Defendants’ positive statements about the
`Company’s business, operations, and prospects were materially false and/or misleading and/or
`lacked a reasonable basis.
`8.
`As a result of Defendants’ wrongful acts and omissions, and the precipitous decline
`in the market value of the Company’s securities, Plaintiff and other Class members have suffered
`significant losses and damages.
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`JURISDICTION AND VENUE
`9.
`The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange Act
`(15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. §
`240.10b-5).
`10.
`This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C.
`§ 1331 and Section 27 of the Exchange Act (15 U.S.C. § 78aa).
`11.
`Venue is proper in this Judicial District pursuant to 28 U.S.C. § 1391(b) and Section
`27 of the Exchange Act (15 U.S.C. § 78aa(c)). Substantial acts in furtherance of the alleged fraud
`or the effects of the fraud have occurred in this Judicial District. Many of the acts charged herein,
`including the dissemination of materially false and/or misleading information, occurred in
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`Case 3:22-cv-02672 Document 1 Filed 05/03/22 Page 4 of 23
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`substantial part in this Judicial District. In addition, the Company’s principal executive offices are
`located in this District.
`12.
`In connection with the acts, transactions, and conduct alleged herein, Defendants
`directly and indirectly used the means and instrumentalities of interstate commerce, including the
`United States mail, interstate telephone communications, and the facilities of a national securities
`exchange.
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`PARTIES
`13.
`Plaintiff Fiyyaz Pirani, as Trustee of Imperium Irrevocable Trust, as set forth in the
`accompanying certification, incorporated by reference herein, purchased Netflix securities during
`the Class Period, and suffered damages as a result of the federal securities law violations and false
`and/or misleading statements and/or material omissions alleged herein.
`14.
`Defendant Netflix is incorporated under the laws of Delaware with its principal
`executive offices located in Los Gatos, California. Netflix’s common stock trades on the NASDAQ
`exchange under the symbol “NFLX.”
`15.
`Defendant Reed Hastings (“Hastings”) was the Co-Chief Executive Officer (“Co-
`CEO”), President, and a director of the Company at all relevant times.
`16.
`Defendant Ted Sarandos (“Sarandos”) was the Co-CEO, Chief Content Creator, and
`a director of the Company at all relevant times.
`17.
`Defendant Spencer Neumann (“Neumann”) was the Company’s Chief Financial
`Officer (“CFO”) at all relevant times.
`18.
`Defendants Hastings, Sarandos, and Neumann (collectively the “Individual
`Defendants”), because of their positions with the Company, possessed the power and authority to
`control the contents of the Company’s reports to the SEC, press releases and presentations to
`securities analysts, money and portfolio managers and institutional investors, i.e., the market. The
`Individual Defendants were provided with copies of the Company’s reports and press releases
`alleged herein to be misleading prior to, or shortly after, their issuance and had the ability and
`opportunity to prevent their issuance or cause them to be corrected. Because of their positions and
`access to material non-public information available to them, the Individual Defendants knew that
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`Case 3:22-cv-02672 Document 1 Filed 05/03/22 Page 5 of 23
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`the adverse facts specified herein had not been disclosed to, and were being concealed from, the
`public, and that the positive representations which were being made were then materially false
`and/or misleading. The Individual Defendants are liable for the false statements pleaded herein.
`SUBSTANTIVE ALLEGATIONS
`Background
`19.
`Netflix primarily operates an entertainment platform that offers TV series,
`documentaries, feature films, and mobile games across a variety of genres and languages. It also
`offers a DVD-by-mail service in the U.S.
`Materially False and Misleading
`Statements Issued During the Class Period
`20.
`The Class Period begins on October 19, 2021.1 On that day, Netflix announced its
`third quarter 2021 financial results in a letter to shareholders that stated, in relevant part:
`After a lighter-than-normal content slate in Q1 and Q2 due to COVID-related
`production delays in 2020, we are seeing the positive effects of a stronger slate in
`the second half of the year. In Q3, we grew revenue 16% year over year to $7.5
`billion, while operating income rose 33% vs. the prior year quarter to $1.8 billion.
`We added 4.4m paid net adds (vs. 2.2m in Q3’20) to end the quarter with 214m
`paid memberships. We’re very excited to finish the year with what we expect to be
`our strongest Q4 content offering yet, which shows up as bigger content expense and
`lower operating margins sequentially.
`*
`*
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`We under-forecasted paid net adds for the quarter (4.4m actual vs. our 3.5m
`projection), while ending paid memberships of 214m was within 0.4% of our
`forecast. For the second consecutive quarter, the APAC region was our largest
`contributor to membership growth with 2.2m paid net adds (half of total paid net
`adds) as we are continuing to improve our service in this region. In EMEA, paid net
`adds of 1.8m improved sequentially vs. the 188k in Q2 as several titles had a
`particularly strong impact. The UCAN and LATAM regions grew paid memberships
`more slowly. These regions have higher penetration of broadband homes although
`we believe we still have ample runway for growth as we continue to improve our
`service.
`As a reminder, the quarterly guidance we provide is our actual internal forecast at
`the time we report and we strive for accuracy. For Q4’21, we forecast paid net adds
`of 8.5m, consistent with Q4’20 paid net additions. For the full year 2021, we forecast
`an operating margin of 20% or slightly better. This means that Q4’21 operating
`margin will be approximately 6.5% compared with 14% in Q4’20. The year over
`year decline in operating margin is due mostly to our backloaded big content release
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`1 Unless otherwise stated, all emphasis in bold and italics hereinafter is added.
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`Case 3:22-cv-02672 Document 1 Filed 05/03/22 Page 6 of 23
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`schedule in this Q4, which will result in a roughly 19% year over year increase in
`content amortization for Q4’21 (compared with ~8% growth year to date).
`21.
`The same day, Netflix filed its quarterly report on Form 10-Q with the SEC for the
`period ended September 30, 2021, affirming the previously reported financial results. It was signed
`by Defendants Hastings and Neumann.
`22.
`Also on October 19, 2021, Netflix held a conference call to discuss the financial
`results with analysts and investors. During the call, Defendant Neumann stated that “throughout the
`quarter, the business remained healthy as it had been throughout the year with churn at low levels,
`down prior to the comparable periods both in 2020 and two years ago pre-COVID in 2019.” He also
`stated that management “expect[ed] to continue in terms of that healthy retention and then this kind
`of acceleration as we get past those initial market reopenings with COVID [and] past the COVID
`pull forwarding into the strength of our slate . . . .”
`23.
`The above statements identified in ¶¶ 20-22 were materially false and/or misleading,
`and failed to disclose material adverse facts about the Company’s business, operations, and
`prospects. Specifically, Defendants failed to disclose to investors: (1) that Netflix was exhibiting
`slower acquisition growth due to, among other things, account sharing by customers and increased
`competition from other streaming services; (2) that the Company was experiencing difficulties
`retaining customers; (3) that, as a result of the foregoing, the Company was losing subscribers on a
`net basis; (4) that, as a result, the Company’s financial results were being adversely affected; and
`(5) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business,
`operations, and prospects were materially false and/or misleading and/or lacked a reasonable basis.
`24.
`On January 20, 2022, after the market closed, Netflix revealed that it “slightly over-
`forecasted paid net adds in Q4.” In a letter to shareholders, Netflix announced its fourth quarter 2021
`financial results and stated, in relevant part:
`Full year revenue of $30 billion grew 19% year over year while operating income of
`$6.2 billion rose 35% year over year. We finished Q4 with 222m paid memberships
`(with 8.3m paid net adds in Q4). Even in a world of uncertainty and increasing
`competition, we’re optimistic about our long-term growth prospects as streaming
`supplants linear entertainment around the world.
`*
`*
`*
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`Case 3:22-cv-02672 Document 1 Filed 05/03/22 Page 7 of 23
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`We slightly over-forecasted paid net adds in Q4 (8.3m actual compared to the 8.5m
`paid net adds in both the year ago quarter and our beginning of quarter
`projection). For the full year 2021, paid net adds totaled 18m vs 37m in 2020. Our
`service continues to grow globally, with more than 90% of our paid net adds in 2021
`coming from outside the UCAN region.
`Nonetheless, our UCAN region added 1.2m paid memberships in Q4’21 (vs. 0.9m
`last year), marking our strongest quarter of member growth in this region since the
`early days of COVID-19 in 2020. In APAC, we increased paid memberships by 2.6m
`(vs. 2.0m in the year ago quarter) with strong growth in both Japan and India. EMEA
`was our largest contributor to paid net adds in Q4 (3.5m vs. 4.5m in the prior year
`period) and the region delivered record quarterly revenue, exceeding $2.5 billion for
`the first time. LATAM paid net adds totaled 1.0m vs. 1.2m last year.
`*
`*
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`For Q1’22, we forecast paid net adds of 2.5m vs. 4.0m in the year ago quarter. Our
`guidance reflects a more back-end weighted content slate in Q1’22 (for example,
`Bridgerton S2 and our new original film The Adam Project will both be launching in
`March). In addition, while retention and engagement remain healthy, acquisition
`growth has not yet re-accelerated to pre-Covid levels. We think this may be due to
`several factors including the ongoing Covid overhang and macro-economic
`hardship in several parts of the world like LATAM.
`*
`*
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`Consumers have always had many choices when it comes to their entertainment time
`- competition that has only intensified over the last 24 months as entertainment
`companies all around the world develop their own streaming offering. While this
`added competition may be affecting our marginal growth some, we continue to
`grow in every country and region in which these new streaming alternatives have
`launched. This reinforces our view that the greatest opportunity in entertainment is
`the transition from linear to streaming and that with under 10% of total TV screen
`time in the US, our biggest market, Netflix has tremendous room for growth if we
`can continue to improve our service.
`25.
`The same day, Netflix held a conference call to discuss the financial results with
`analysts and investors. During the call, Defendant Neumann stated that “overall, the business was
`healthy. Retention was strong. Churn was down.” He continued that “acquisition was growing, just
`not growing quite as fast as we were perhaps hoping or forecasting,” which was “probably a bit of
`just overall COVID overhang that’s still happening . . . [and] some macroeconomic strain in some
`parts of the world . . . .”
`26.
`On this news, the Company’s stock price fell $110.75, or 21.7%, to close at $397.50
`per share on January 21, 2022, on unusually heavy trading volume.
`27.
`On January 27, 2022, Netflix filed its annual report on Form 10-K with the SEC for
`the period ended December 31, 2021 (the “2021 10-K”), affirming the previously reported financial
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`Case 3:22-cv-02672 Document 1 Filed 05/03/22 Page 8 of 23
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`results. It was signed by the Individual Defendants. Regarding risks affecting the business, the
`Company stated, in relevant part:
`If our efforts to attract and retain members are not successful, our business will
`be adversely affected.
`We have experienced significant membership growth over the past several years. Our
`penetration and growth rates vary between the jurisdictions where we provide our
`service. In countries where we have been operating for many years or where we are
`highly penetrated, our membership growth is slower than in newer or less penetrated
`countries. Our ability to continue to attract and retain members will depend in part
`on our ability to consistently provide our members in countries around the globe
`with compelling content choices, effectively drive conversation around our content
`and service, as well as provide a quality experience for choosing and enjoying TV
`series, documentaries, feature films and mobile games. Furthermore, the relative
`service levels, content offerings, pricing and related features of competitors to our
`service may adversely impact our ability to attract and retain memberships.
`Competitors include other entertainment video providers, such as MVPDs, and
`streaming entertainment providers (including those that provide pirated content),
`video gaming providers, as well as user-generated content, and more broadly other
`sources of entertainment that our members could choose in their moments of free
`time.
`If consumers do not perceive our service offering to be of value, including if we
`introduce new or adjust existing features, adjust pricing or service offerings, or
`change the mix of content in a manner that is not favorably received by them, we
`may not be able to attract and retain members. We have recently expanded our
`entertainment video offering to include games. If our efforts to develop and offer
`games are not valued by our current and future members, our ability to attract and
`retain members may be negatively impacted. We may, from time to time, adjust our
`membership pricing, our membership plans, or our pricing model itself, which may
`not be well-received by consumers, and which may result in existing members
`canceling our service or fewer new members joining our service. In addition, many
`of our members rejoin our service or originate from word-of-mouth advertising from
`existing members. If our efforts to satisfy our existing members are not successful,
`we may not be able to attract members, and as a result, our ability to maintain and/or
`grow our business will be adversely affected. Members cancel our service for many
`reasons, including a perception that they do not use the service sufficiently, the need
`to cut household expenses, availability of content is unsatisfactory, competitive
`services provide a better value or experience and customer service issues are not
`satisfactorily resolved. Membership growth is also impacted by seasonality, with the
`fourth quarter historically representing our greatest growth, as well as the timing of
`our content release schedules. We must continually add new memberships both to
`replace canceled memberships and to grow our business beyond our current
`membership base. While we currently permit multiple users within the same
`household to share a single account for non-commercial purposes, if multi-
`household usage is abused or if our efforts to restrict multi-household usage are
`ineffective, our ability to add new members may be hindered and our results of
`operations may be adversely impacted. If we do not grow as expected, given, in
`particular, that our content costs are largely fixed in nature and contracted over
`several years, we may not be able to adjust our expenditures or increase our (per
`membership) revenues commensurate with the lowered growth rate such that our
`margins, liquidity and results of operation may be adversely impacted. If we are
`unable to successfully compete with current and new competitors in providing
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`compelling content, retaining our existing memberships and attracting new
`memberships, our business will be adversely affected.
`(First emphasis in original.)
`28.
`The above statements identified in ¶¶ 24-25, 27 were materially false and/or
`misleading, and failed to disclose material adverse facts about the Company’s business, operations,
`and prospects. Specifically, Defendants failed to disclose to investors: (1) that Netflix was
`exhibiting slower acquisition growth due to, among other things, account sharing by customers and
`increased competition from other streaming services; (2) that the Company was experiencing
`difficulties retaining customers; (3) that, as a result of the foregoing, the Company was losing
`subscribers on a net basis; (4) that, as a result, the Company’s financial results were being adversely
`affected; and (5) that, as a result of the foregoing, Defendants’ positive statements about the
`Company’s business, operations, and prospects were materially false and/or misleading and/or
`lacked a reasonable basis.
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`Disclosures at the End of the Class Period
`29.
`On April 19, 2022, after the market closed, Netflix reported that it lost 200,000
`subscribers during the first quarter of 2022, compared to prior guidance expecting the Company to
`add 2.5 million net subscribers. In a letter to shareholders, Netflix reported its first quarter 2022
`financial results, including:
`Paid net additions were -0.2m compared against our guidance forecast of 2.5m and
`4.0m in the same quarter a year ago. The suspension of our service in Russia and
`winding-down of all Russian paid memberships resulted in a -0.7m impact on paid
`net adds; excluding this impact, paid net additions totaled +0.5m. The main challenge
`for membership growth is continued soft acquisition across all regions. Retention
`was also slightly lower relative to our guidance forecast, although it remains at a
`very healthy level (we believe among the best in the industry). Recent price changes
`are largely tracking in-line with our expectations and remain significantly revenue
`positive.
`In EMEA (-0.3M paid net adds, or +0.4m excluding the Russia impact), we saw a
`slowdown in our business in Central and Eastern Europe in March, coinciding with
`Russia’s invasion of Ukraine. Paid net additions in LATAM totaled -0.4M; similar
`to recent quarters, we believe a combination of forces including macroeconomic
`weakness and our price changes (F/X neutral ARM grew 20% year over year) were
`a drag on our membership growth. UCAN paid net adds of -0.6M was largely the
`result of our price change which is tracking in-line with our expectations and is
`significantly revenue positive. We’re making good progress in APAC where we are
`seeing nice growth in a variety of markets including Japan, India, Philippines,
`Thailand and Taiwan.
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`Case 3:22-cv-02672 Document 1 Filed 05/03/22 Page 10 of 23
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`As a reminder, the quarterly guidance we provide is our actual internal forecast at
`the time we report. For Q2’22, we forecast paid net additions of -2.0m vs. +1.5m in
`the year ago quarter. Our forecast assumes our current trends persist (such as slow
`acquisition and the near term impact of price changes) plus typical seasonality (Q2
`paid net adds are usually less than Q1 paid net adds). We project revenue to grow
`approximately 10% year over year in Q2, assuming roughly a mid-to-high single
`digit year over year increase in ARM on a F/X neutral basis. We still target a 19%-
`20% operating margin for the full year 2022, assuming no material swings in F/X
`rates from when we set this goal in January of 2022.
`30.
`The letter to shareholders stated that Netflix is “not growing revenue as fast as we’d
`like.” It further stated: “COVID clouded the picture by significantly increasing our growth in 2020,
`leading us to believe that most of our slowing growth in 2021 was due to the COVID pull forward.”
`However, Netflix cited the slowing revenue growth to four factors, including account sharing with
`an estimated 100 million additional households and competition with other streaming services.
`Specifically, the letter stated, in relevant part:
`First, it’s increasingly clear that the pace of growth into our underlying addressable
`market (broadband homes) is partly dependent on factors we don’t directly control,
`like the uptake of connected TVs (since the majority of our viewing is on TVs), the
`adoption of on-demand entertainment, and data costs. We believe these factors will
`keep improving over time, so that all broadband households will be potential Netflix
`customers.
`Second, in addition to our 222m paying households, we estimate that Netflix is being
`shared with over 100m additional households, including over 30m in the UCAN
`region. Account sharing as a percentage of our paying membership hasn’t changed
`much over the years, but, coupled with the first factor, means it’s harder to grow
`membership in many markets - an issue that was obscured by our COVID growth.
`Third, competition for viewing with linear TV as well as YouTube, Amazon, and
`Hulu has been robust for the last 15 years. However, over the last three years, as
`traditional entertainment companies realized streaming is the future, many new
`streaming services have also launched. While our US television viewing share, for
`example, has been steady to up according to Nielsen, we want to grow that share
`faster. Higher view share is an indicator of higher satisfaction, which supports higher
`retention and revenue.
`Fourth, macro factors, including sluggish economic growth, increasing inflation,
`geopolitical events such as Russia’s invasion of Ukraine, and some continued
`disruption from COVID are likely having an impact as well.
`31.
`On this news, the Company’s share price fell $122.42, or over 35%, to close at
`$226.19 per share on April 20, 2022, on unusually heavy trading volume.
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`CLASS ACTION COMPLAINT
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`Case 3:22-cv-02672 Document 1 Filed 05/03/22 Page 11 of 23
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`CLASS ACTION ALLEGATIONS
`32.
`Plaintiff brings this action as a class action pursuant to Federal Rule of Civil
`Procedure 23(a) and (b)(3) on behalf of a class, consisting of all persons and entities that purchased
`or otherwise acquired Netflix common stock or call options, or sold put options, between October
`19, 2021 and April 19, 2022, inclusive, and who were damaged thereby (the “Class”). Excluded
`from the Class are Defendants, the officers and directors of the Company, at all relevant times,
`members of their immediate families and their legal representatives, heirs, successors, or assigns,
`and any entity in which Defendants have or had a controlling interest.
`33.
`The members of the Class are so numerous that joinder of all members is
`impracticable. Throughout the Class Period, Netflix’s shares actively traded on the NASDAQ.
`While the exact number of Class members is unknown to Plaintiff at this time and can only be
`ascertained through appropriate discovery, Plaintiff believes that there are at least hundreds or
`thousands of members in the proposed Class. Millions of Netflix shares were traded publicly during
`the Class Period on the NASDAQ. Record owners and other members of the Class may be identified
`from records maintained by Netflix or its transfer agent and may be notified of the pendency of this
`action by mail, using the form of notice similar to that customarily used in securities class actions.
`34.
`Plaintiff’s claims are typical of the claims of the members of the Class as all members
`of the Class are similarly affected by Defendants’ wrongful conduct in violation of federal law that
`is complained of herein.
`35.
`Plaintiff will fairly and adequately protect the interests of the members of the Class
`and has retained counsel competent and experienced in class and securities litigation.
`36.
`Common questions of law and fact exist as to all members of the Class and
`predominate over any questions solely affecting individual members of the Class. Among the
`questions of law and fact common to the Class are:
`(a)
`whether the federal securities laws were violated by Defendants’ acts as
`alleged herein;
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`CLASS ACTION COMPLAINT
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`Case 3:22-cv-02672 Document 1 Filed 05/03/22 Page 12 of 23
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`whether statements made by Defendants to the investing public during the
`(b)
`Class Period omitted and/or misrepresented material facts about the business, operations, and
`prospects of Netflix; and
`(c)
`to what extent the members of the Class have sustained damages and the
`proper measure of damages.
`37.
`A class action is superior to all other available methods for the fair and efficient
`adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the
`damages suffered by individual Class members may be relatively small, the expense and burden of
`individual litigation makes it impossible for members of the Class to individually redress the wrongs
`done to them. There will be no difficulty in the management of this action as a class action.
`UNDISCLOSED ADVERSE FACTS
`38.
`The market for Netflix’s securities was open, well-developed and efficient at all
`relevant times. As a result of these materially false and/or misleading statements, and/or failures to
`disclose, Netflix’s securities traded at artificially inflated prices during the Class Period. Plaintiff
`and other members of the Class purchased or otherwise acquired Netflix’s securities relying upon
`the integrity of the market price of the Company’s securities and market information relating to
`Netflix, and have been damaged thereby.
`39.
`During the Class Period, Defendants materially misled the investing public, thereby
`inflating the price of Netflix’s securities, by publicly issuing false and/or misleading statements
`and/or omitting to disclose material facts necessary to make Defendants’ statements, as set forth
`herein, not false and/or misleading. The statements and omissions were materially false and/or
`misleading because they failed to disclose material adverse information and/or misrepresented the
`truth about Netflix’s business, operations, and prospects as alleged herein.
`40.
`At all relevant times, the material misrepresentations and omissions particularized in
`this Complaint directly or proximately caused or were a substantial contributing cause of the
`damages sustained by Plaintiff and other members of the Class. As described herein, during the
`Class Period, Defendants made or caused to be made a series of materially false and/or misleading
`statements about Netflix’s financial well-being and prospects. These material misstatements and/or
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