The Netflix (NASDAQ: NFLX) share price has been a phenomenal stock success for long-term investors, rising from around $140 five years ago to a peak of $690 on 29 October 2021. As streaming accelerated during the many lockdowns of the pandemic, Netflix has seen rapid extreme growth.

But at $380 right now, the streaming stock’s gains over the past two years have been all but erased. And with fellow tech stock Peloton also falling 20%, some worry the tech bubble that has propped up the S&P 500 and NASDAQ Composite indices might soon rupture.

Netflix share price: Q4 results

At first glance, Q4 results were a success for the streaming company. Netflix emphasised that it was ‘the most Emmy-winning and most nominated TV network and the most Oscar-winning and nominated movie studio of 2021.’ The company highlighted its biggest ever success, the Korean thriller ‘Squid Game.’ 1.65 billion hours of the series were viewed by subscribers in just four weeks.

It also released two star-studded films in the quarter. ‘Red Notice,’ and ‘Don’t Look Up,’ are already the most popular films in Netflix’s history. And overall, ‘Netflix series accounted for six out of the 10 most searched shows globally while our films represented two of the top 10.’

And this creative success showed up in headline figures. Full-year revenue grew 19% to $30 billion, while operating income rose 35% year-over-year to $6.2 billion. Quarterly revenue grew 16% and average revenue per membership by 17% year-over-year. Moreover, the streamer’s full-year operating margin of 21% is both higher than the 18% achieved in 2020, and its previously forecasted guidance of 20%.

However, with 60% of revenue coming from outside of the US, the company has lost $1 billion on USD appreciation. But overall, many companies would be ecstatic with these results. However, as a US tech darling, Netflix’s previously sky-high valuation was based on continued explosive growth. And those days may be over.

Netflix share price: the bigger picture

In the world of tech stocks, it’s not the trajectory of growth that matters, but the velocity. And for Netflix, this means subscriber additions.

But the streamer only added 8.3 million subscribers in Q4, 200,000 less than it projected despite increased spending on its original programming. And Netflix only expects to add 2.5 million new subscribers in the current quarter, far fewer than the 4 million added in the same quarter last year, and less than half the 5.9 million forecast by the Refinitiv average analyst consensus.

Moreover, Netflix’s subscriber count only increased by 18 million in this financial year, compared to the 37 million added in 2020. The FAANG stock acknowledges that competition ‘has only intensified over the last 24 months as entertainment companies all around the world develop their own streaming offering.’ Disney, Apple, Amazon and HBO are all competing for limited consumer income.

But with 222 million paying customers, Netflix believes ‘even in a world of uncertainty and increasing competition, we’re optimistic about our long-term growth prospects.’ Moreover, it argues that with ‘under 10% of total TV screen time in the US, our biggest market, Netflix has tremendous room for growth.’ But JP Morgan CEO Jamie Dimon is predicting up to seven interest rate rises in the US this year, which could affect Netflix’s ability to expand using cheap debt.

However, even after a recent $1 price increase, Netflix’s basic plan in the US is still only $9.99 per month. And with inflation stateside running at 7%, squeezed consumers may prefer a month of streaming entertainment over an evening at an AMC or Cineworld theatre.

The Netflix share price is now hovering just above pre-pandemic levels, even after adding millions of subscribers over the past two years. But with the lockdown factor fading and competition intensifying, an eventual slowdown in subscriber growth was always going to be unavoidable.

And for those hoping for a price recovery, the crucial question is whether subscriber growth is approaching a ceiling, or simply reverting to pre-pandemic norms.

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