If you had invested $50,000 in streaming entertainment giant Netflix (NFLX -0.79%) a decade ago, you'd be a millionaire right now. This equates to a compound annual return of approximately 35%, trouncing the 11.3% annual return of the S&P 500 during the same time.

It would be foolish to invest in Netflix expecting this impressive historical performance to repeat itself in the future. Competitive and industry dynamics change, and the company's massive $214 billion market capitalization becomes an anchor on future growth.

That being said, I believe Netflix still has the potential to outperform the overall market, albeit by a smaller margin, in the years to come.

How we got here

Netflix's remarkable stock performance over the last 10 years should come as no surprise given its status as the pioneer of the burgeoning streaming entertainment category. What started as a DVD-by-mail company (competing primarily with Blockbuster) eventually became the global media leader we see today. Netflix realized early that the internet provided a way to give consumers a superior experience, emphasizing on-demand and personalized entertainment.

man excited as cash flies in the air

Image source: Getty Images.

On Dec. 31, 2009, Netflix had just over 12 million subscribers. Today, the company boasts having over 195 million paid memberships in over 190 countries. This growth is more impressive given the regular increase in prices for Netflix's service over the years. Warren Buffett characterizes an outstanding business as one that exhibits pricing power, and Netflix investors have recognized this, as its stock price appreciation has shown.

Sales nearly tripled from 2015 to 2019, while profits have soared. The company's founders understood that the internet was only going to become a bigger part of consumers' daily lives, and continued to invest heavily in improving the service. During the last three years, Netflix spent a whopping total of $23 billion on content. The goal is to provide exceptional value to members by continuously enhancing the offering of shows, movies, and documentaries. I'd say Netflix is doing quite well in this regard -- the company snatched a record 160 Emmy nominations this year, showcasing its ability to produce a high-quality content catalog.

The future is still bright

It's easy to see why Netflix shares have performed so well in the past, but what does the future hold? While the company has already reached its membership goal of 60 to 90 million in the U.S., the international opportunity is more primed for expansion.

Over the past 12 months, 84% of new subscriber additions were from outside the U.S. and Canada. Producing compelling content for different cultures is not an easy task, but it is necessary for Netflix to continue building a media business with global scale. The company is focused on developing local-language original programming in a number of countries, which will support international membership in the years to come. Furthermore, as the internet becomes more ubiquitous and latency and payment infrastructure improve, Netflix should raise household penetration in less developed markets.

Standing in the way of Netflix's global dominance is competition from a number of other streaming services, namely Amazon Prime, AT&T's HBOMax, Disney+, Apple+, and Comcast's Peacock. While some of these rivals possess rich legacy content, the ultimate winners in this space will pour money into producing exclusive original content. As previously mentioned, Netflix's record-setting Emmy nomination count is a positive sign for the company going forward.

Is it too late?

Shares are up 47% this year alone, as 2020 has shown just how essential Netflix's service is as a meaningful source of entertainment for consumers all over the world. If returns over the next decade resemble the past, this business will be worth over $4 trillion 10 years from now. This isn't a realistic scenario, so expectations should be tempered.

However, the company's recent third quarter earnings miss provides a chance to buy shares in this high-flying name during a sell-off. Because the international opportunity is still in its early stages, I think Netflix has a long runway of growth in front of it. It's not too late to get in on this millionaire-maker stock.