As Netflix stock continues to plunge, and subscribers are leaving the service in a cooling economy, the company is now preparing for a new wave of layoffs.
It is expected that by the end of the week it will have notified which of its 11,000 staffers will be getting the axe. This is coming right after another downsizing which was precipitated by the company seeing 70% of its stock price evaporate since the spring.
Just last month the video streaming giant laid off 150 full time employees, another 70 of its animators, and 60-70 of its contract workers. It has been noted many of those who were laid off worked in series and initiatives associated with Social Justice causes.
The turnaround is shocking for Netflix, coming on its surge in popularity during the days of the Covid-19 lockdowns during the pandemic. The stock fall too, has ben shocking. Just in April, it had been trading for $348 per share, however since then it has dropped to $172 per share. Adding to the trouble, executives have forecasted the streamer will lose two million more subscribers in the second quarter.
Netflix’s co-chief executive Reed Hastings said the company was examining the possibility of adding advertisements to its cheaper subscription packages, and added they would, “figure it out over the next year or two.”
Netflix CEO Ted Sarandos told The New York Times he found the 70% stock drop, “horrifying, disappointing and embarrassing.”
He went on, “We make decisions based on the best information we have at the time. They are not always going to be right, but how you help navigate the outcomes, and the urgency you bring to it, is what gets folks through the storm. And the storms will come. How much time do you spend licking your wounds? Let’s have that burned into our memory, but we’ve got to move on and move fast.”
The company has also been dropping projects, such as Prince Harry and Megan Markle’s development projects. Sarandos explained that the company had taken a chance on many celebrities with no film making experience, but that chances taken do not always work out.
As all of this is playing out, the company is also being sued by investors who claim the company lied about subscriber growth in the six months before the subscriber exodus leading to the recent plunge in price.
Filed in San Francisco federal court, the lawsuit alleges that the streamer violated US securities laws by making ‘materially false and/or misleading statements’ and failing “to disclose material adverse facts about the company’s business, operations and prospects.’ It is seeking class action status.
Fiyyaz Pirani, a trustee of Imperium Irrevocable Trust, which is a Netflix shareholder is the lead plaintiff named in the suit which seeks damages for losses endured after the company failed to make its subscriber growth estimates. It seeks damages for investors who traded Netflix stock from October 19, 2021, to April 19, 2022, including ‘compensatory damages’ of an ‘amount to be proven at trial.’
