According to a lawsuit filed by shareholders at the US district court in San Francisco, Netflix Inc. (NFLX  ) allegedly misled investors about subscriber numbers. The case comes as a result of the company's first subscriber losses in a decade.

The filings accused the streaming behemoth of making "materially false" or misleading claims and did not disclose adequate operations and business prospects data. The suit further alleges that the company has been misleading shareholders since last year and neglected to tell investors that subscriber growth had been cooling. Netflix has been quiet on the suit, turning down any requests for comment.

The possibility of investors being misled by Netflix certainly raises questions about the streaming pioneer, though the writing may have been on the wall. With tight competition from the likes of Disney+ (DIS  ), Hulu, HBO Max (owned by Warner Brothers Discovery, (WBD  ), and consumers less bottled up by pandemic restrictions, the company's market dominance had far too many threats undermining it to not stumble at some point. Additionally, the company admitted to facing stiff pressure from password sharing between users.

Regardless of the lawsuit's outcome, Netflix's dominant position certainly seems to be under threat of being toppled. The company has already canned several animated projects in addition to culling many members of the much-touted, highly diverse writing staff at its fan news blog, "Tudum."

Moreover, the firm's reputation has been significantly undermined in recent years among its users. The term "Netflix Original" is often used on social media to sarcastically refer to the company's backlog of poorly received, low-quality content.

Netflix shares slipped further into the red this week, much to the chagrin of investors. After fluctuating but remaining mostly flat through Wednesday, news of the lawsuit likely sent shares tumbling into their late-week plunge. Netflix stocks sunk 10.5% last week.