LOS ANGELES (Legal Newsline) - The firm Robbins Geller will lead class action litigation against The Walt Disney Company that claims investors were misled by executives' statements about the success of its Disney+ streaming platform.
Los Angeles federal judge Consuelo Marshall on Aug. 7 granted the firm's motion for selection of lead counsel and lead plaintiff, which it filed July 11. Lead plaintiff will be the retirement and benefit funds of the Central Pennsylvania Teamsters Pension Fund.
The motion says the funds lost $4.4 million after purchasing nearly 80,000 shares of Disney common stock.
The lawsuit also names Robert Chapek, Christine McCarthy and Kareem Daniel. It says Chapek staked his legacy on he success of Disney+ during his two years as CEO.
The suit says he and other defendants claimed the platform was on track to achieve profitability and up to 260 million paid global subscribers by the end of fiscal year 2024.
"Defendants made these representations notwithstanding the fact that initial subscriber numbers for Disney+ had been boosted temporarily and unsustainably by a low launch price of $6.99 per month, a bevy of additional short-term, low-cost promotions, and a near-captive audience of consumers who were homebound due to COVID-19 restrictions," the suit says.
Disney hid the staggering costs of competing in the streaming world, the suit says. In December 2020, the company's stock price reached an all-time high of more than $180 per share, the suit says, before it fell to $92.31 on May 11, 2023 as a result of financial troubles at the company.