Netflix, Inc. (NFLX) Is Going Global — Fast!

What’s the big deal?
Looking at Netflix’s current international results, you might wonder why investors should even care about non-U.S. growth. After all, the international division is reporting operating losses amid this rampant subscriber growth. That old joke about balancing negative margins with high volume springs to mind.

But then you’re forgetting that it costs money to start new markets from scratch. Netflix has to build some infrastructure in every new territory, and then the marketing blitz begins. Netflix turned its first Canadian profit in 2012, setting the bar for Latin America and the various European markets to follow.

By 2016, all of these geographies will be mature and profitable — not to mention much larger than they are today. And whatever markets Netflix launches in 2014 should be well on their way to operating profits as well.

In short, overseas subscribers should pull their weight for Netflix profits in 2016. If nothing else, the trajectory toward equal operating margins inside and outside America should be very clear.

The Foolish takeaway
In the final analysis, my old targets have been moved by a strong return to international growth that didn’t seem to be on the table in early 2012. I’ll be very disappointed if Netflix, Inc. (NASDAQ:NFLX) hasn’t doubled again three years from now, because that means either that the domestic addressable market is smaller than expected or that the international bonanza hit a brick wall.

I hope I’ve answered Brad’s question with a very clear “yes.” Netflix remains my largest personal holding and my most successful CAPScall to date, and I expect at least three more years of market-crushing success.

The article Netflix Shares Should Double When the Company Crosses This Bridge originally appeared on Fool.com and is written by Anders Bylund.

Fool contributor Anders Bylund owns shares of Netflix, but he holds no other position in any company mentioned. Check out Anders’ bio and holdings or follow him on Twitter and Google+. The Motley Fool owns shares of Netflix. Motley Fool newsletter services have recommended buying shares of and creating a bear put ladder position in Netflix. 

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