The streaming giant's stock has hit a year low and is down almost 40% from its all-time high of around $690 back in November.
Netflix released its full fiscal 2021 earnings last month and reported yet another quarter of healthy revenue and member growth. Revenue climbed by 16% year over year to $7.7 billion, while global paid memberships rose by 8.9% year over year to a new record of 221.8 million. For the full year, the streaming behemoth reported an 18.8% year-over-year increase in revenue to $29.7 billion while net income soared by 84% year over year to $5.1 billion.
Investors, however, were spooked by Netflix's slowing growth, as evidenced by a sharp year-over-year fall in member numbers compared with the fourth quarter of 2020. Back then, the company saw a nearly 22% year-over-year jump in memberships as pandemic-related restrictions prompted a surge in people signing up for streaming television. Netflix also provided weak guidance for the first quarter of 2022, with revenue projected to rise just 10.3% year over year and with an addition of only 2.5 million members. For Q4 2020, net additions were more than triple this estimate at 8.5 million.
Despite these weaker numbers, Netflix continues to invest in its content slate for 2022. The company enjoyed huge success with the dystopian thriller Squid Game, which notched 1.65 billion hours of viewing in just four weeks, and is sinking money into more original content to come up with more hits. The efforts have paid off thus far, with six out of the 10 most-searched TV series belonging to Netflix.
The company is also broadening its revenue streams with the introduction of mobile games on both Android and iPhone. Members can access these games through their Netflix mobile app and have 10 games to choose from. There are plans to expand these games into additional genres and regions this year as Netflix explores this potentially lucrative revenue source.
The numbers show that the effects of the pandemic-induced surge in demand are now slowly but surely wearing off. This is not surprising, but investors should expect Netflix to continue growing, albeit at rates that are more in line with pre-pandemic levels.