According to the Complaint, Netflix is an Internet subscription service that streams TV shows and movies. The Company's subscribers can watch unlimited TV shows and movies, on nearly any Internet-connected screen, and in the United States, subscribers can also receive DVDs delivered to their homes.
The Complaint alleges that Netflix's revenue growth is largely correlated to subscriber growth. Netflix gave a target of 7 million new subscribers for its domestic streaming segment for the year ended 2012.
On July 24, 2012, the Company announced its results for the second quarter 2012. In its letter to Shareholders, defendants touted that the Company had "achieved financial performance in the top half of . . guidance in nearly every metric, and . . . returned to profitability." What was disconcerting to investors, however, was that the Company had only 530,000 net subscription additions for its domestic streaming business, resulting in total domestic streaming subscriptions of 23.94 million. The Company also noted that it may not reach its target of adding 7 million domestic streaming subscribers by the end of the year. On this news, the Company's stock price plummeted from $80.39 on July 24, 2012 to a close of $60.28 per share on July 25, 2012, a 25 percent decrease, on an extremely high volume of 24.8 million shares.
On July 9, 2013, the plaintiff filed a Notice voluntarily dismissing this case without prejudice.