Netflix (Nasdaq: NFLX) shares are up more than 14% today on news that the online video service side of the business is expanding into the U.K. and Ireland. At $98.66 a share as of 3:25 p.m. today, the technology  stock is up a whopping 40% during the first week of trading in 2012.

That’s a nice early-year bounce-back for a stock that sorely needed it. A 60% price hike and a botched attempt to divide its mail-delivery and streaming video services into two websites sent Netflix shares spiraling downward, shedding three-quarters of its $300 stock price from July 13 to October 25. The price hike in particular angered subscribers, as 800,000 of them jumped ship.

However, the company’s expansion into the U.K. and Ireland is purported to be just the beginning of Netflix’s push into Europe, where it will compete directly with Amazon’s (Nasdaq: AMZN) Lovefilm online-video service. Amazon’s shares, meanwhile, were down 2.55% as of 2:56 p.m. today.

Though the second half of 2011 was a nightmare for Netflix, the company’s overseas expansion is one of several reasons that Netflix may be due for a sharp turnaround in 2012. The company still had more than 23 million U.S. subscribers before even tapping into the European market. It still accounts for 35% of all online streaming bandwidth. And now hedge fund manager Whitney Tilson is telling CNBC that the late-year selloff of Netflix stock has made the company small enough (market cap: $4.9 billion) to become a potential buyout target.

Published by Wyatt Investment Research at