Streaming content pioneer Netflix (NASDAQ: NFLX) reported fiscal 2021 fourth-quarter results on Thursday, Jan. 20, that disappointed the market. The stock fell 22% on the day following the announcement.

Netflix thrived at the onset of the pandemic, when billions of people spent most of their time at home and demand for in-home entertainment surged. However, now that economies are reopening, Netflix is having difficulty adding subscribers. Let's dive deeper into the quarter's results.

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Netflix is expecting slower subscriber growth

In its fourth quarter ended Dec. 31, Netflix added 8.3 million subscribers. That was a sequential 3.9% addition to its total, now at 222 million. However, it was less than the 8.5 million subscribers management had projected to add in Q4. The lower-than-expected subscriber count was only the start of the company's bad news in the Q4 report.

Netflix projected subscriber additions of 2.5 million for the upcoming fiscal first quarter of 2022. To put the magnitude of disappointment in that projection into context, consider Netflix's subscriber additions in Q1 in the previous five years: 4 million in 2021, 15.8 million in 2020, 9.6 million in 2019, 8.3 million in 2018, and 5.3 million in 2017. The company attributed the slower growth to macroeconomic hardship worldwide caused by COVID-19 and the overhang of the surge in membership additions at the beginning of the pandemic.

Still, Netflix took an optimistic tone in the shareholder letter that accompanies the quarter's results: "Even in a world of uncertainty and increasing competition, we're optimistic about our long-term growth prospects as streaming supplants linear entertainment around the world. We're continually improving Netflix so that we can please our members, grow our share of leisure time, and lead in this transition."

It holds that streaming content is, in general, a better alternative for consumers compared with a linear connection. But with rising competition in the streaming industry, it is no longer automatic for consumers to choose Netflix when cutting the cord on cable. Moreover, within the streaming industry, Netflix is a premium (i.e., expensive) option. Beyond competition from lower-priced providers, there is competition from free ad-supported services. It all came to the forefront in this quarter's report, and the stock is crashing in response.

What this could mean for Netflix investors

The price crash following the disappointing results has Netflix trading at a price-to-earnings ratio of 36, the lowest it has sold for in five years. The stock is likely to get more expensive on that front as management is projecting Q1 earnings per share to decline from the same quarter the year before.

While Netflix's short-term prospects may be in flux concerning subscriber additions, its long-run potential remains intact. Investors that can stomach the short-term volatility may have an opportunity to buy this excellent media-streaming stock at a beaten-down price.

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Parkev Tatevosian has no position in any of the stocks mentioned. The Motley Fool owns and recommends Netflix. The Motley Fool has a disclosure policy.