Netflix shares dove more than 20% Friday following a disappointing forecast for subscriber growth for the streaming service, as US stocks retreated again at the start of the final session of a bruising week.

The travails of Netflix and of Peloton -- another beneficiary of the so-called "pandemic trade" -- weighed especially on the tech-centered Nasdaq, which suffered the worst losses of the major indices.

About 35 minutes into trading, the Nasdaq was down 1.3% at 13,971.36. The index has dropped more than six percent this week.

The Dow Jones Industrial Average shed 0.2% to 34,632.15, while the broad-based S&P 500 lost 0.8% at 4,446.33.

Stocks have been under pressure all week as investors question lofty valuations scored at the end of 2021 amid a sharp pivot by the Federal Reserve away from extreme accommodation and towards tighter monetary policy, which is expected to soon bring higher lending rates.

Adding to this has been a reranking by investors of some companies that prospered earlier the pandemic when consumers were stuck at home.

Netflix shares fell 23.7% as it projected it would add only 2.5 million subscribers in the first quarter of 2022.

The company behind "Squid Game" and "The Crown" pointed to the "ongoing Covid overhang and macro-economic hardship in several parts of the world."

Netflix also alluded to rising competition from the likes of HBO Max and Disney+.

Meanwhile, Peloton Interactive rose 4.2% after slumping nearly 25% Thursday following a report that the fitness firm planned to suspend production of bikes and treadmills due to falling consumer demand.

In a memo to employees late Thursday, Peloton CEO and founder John Foley called the reports "false," but said "we are resetting our production levels for sustainable growth."

Netflix added 8.3 million customers from October to December, when it released a heavy lineup of new programming including the star-studded movies "Red Notice" and "Don't Look Up" and a new season of "The Witcher." Industry analysts had projected 8.4 million.

The company's global subscriber total at the end of 2021 reached 221.8 million.

In a letter to shareholders, Netflix said it believed the ongoing Covid-19 pandemic and economic hardships in several parts of the world like Latin America may have kept subscriber growth from rebounding to levels seen before the pandemic.

Covid "created a lot of bumpiness" that made it hard to project subscriber numbers, "but all the fundamentals of the business are pretty solid," co-chief executive Ted Sarandos said in a post-earnings video interview.The company posted adjusted earnings per share of $1.33, crushing analyst consensus estimates of 82 cents. Revenue hit $7.71 billion, in line with estimates.

Netflix last week raised prices in its biggest market, the US and Canada, where analysts say growth is stagnating, and is now looking for growth overseas.

The company rode a roller coaster during the pandemic, with steep growth early in 2020 when people were staying home and cinemas were closed, followed by a slowdown in 2021. Netflix picked up more than 36 million customers in 2020, and 18.2 million in 2021.

Netflix's subscriber growth in 2022 had been expected to stabilize and return to the pace logged before the pandemic, when it added 27.9 million subscribers in 2019, analysts say.

The company's upcoming slate includes new instalments of "Ozark" and "Stranger Things" and a three-part Kanye West documentary.

Netflix's upcoming slate includes new installments of 'Ozark'

Competitors including Disney and AT&T's HBO Max, are pouring billions into creating new programming to grab a share of the streaming market.

Netflix said competition "may be affecting our marginal growth some," but added that it was still growing in every country where new streaming options have launched.

"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," Netflix said in its shareholder letter.

In their video interview, executives sought to reassure investors that Netflix's long-term prospects were bright.

Mr Sarandos said the service had not seen a decline in customer engagement or retention and he projected the switch to streaming from traditional television would continue to open opportunities worldwide. The stock remained down nearly 20%.

"The pace of the migration may be a little hard to call from time to time when there are kind of very global events or even local conditions," Mr Sarandos said, "But it's absolutely happening. There's no question of that."

The company is looking for new ways to attract customers including with mobile video games. Netflix said it released 10 games in 2021, was pleased with the early reception and would expand its gaming portfolio in 2022.