Investors got just the news to confirm hopes that Netflix is on track for the kind of growth to justify its stock price. After expanding to Canada, the company will launch its online streaming service in 43 countries in South and Central America along with the Caribbean later this year.
This news sent the high-flying stock soaring to yet another high, bringing it up more than 150 percent in the past 12 months.
Launching in Latin America is a significant move for Netflix, bringing the company from a regional player to a global powerhouse. Although the company didn't announce a price for its monthly subscription service or when exactly it will launch, that doesn't change the importance of today's news.
Citi analyst Mark Mahaney wrote that today's news is "bigger/broader than the Market was expecting."
Mahaney has a Buy on the stock, saying that although "there is absolutely no guarantee that NFLX will succeed in any of these new International markets," Mahaney is bullish that "Internet Video Streaming will become a major activity in each of these markets."
Mahaney has a $300 price target on the stock, based on his estimation that International revenue will generate an additional $27 per share in value.
Barclays analyst Anthony DiClemente says today's news means his subscriber estimates for 2012 of 42.7 million (up 37 percent) are "somewhat conservative."
DiClemente is optimistic about Netflix's ability to expand its content deals into these new areas, because there are fewer existing content deals on exclusivity and windowing in these emerging markets. He has a price target of $315 and an "Overweight" rating.
BMO Capital Markets analyst Edward Williams is also focused in on how this new scale could boost Netflix's content licensing deals.
He only has a "Market Perform" rating, but he says this "makes the company a more attractive partner for content providers seeking to monetize their assets." There's no question—the bigger Netflix gets, the more negotiating leverage it has. And the further it looks outside the U.S., the less competition it faces for premium content.
And once Netflix has nailed these new markets we can expect Europe to come next. But for now, the company has its hands full.
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