Long-term investors of Netflix (NASDAQ:NFLX) are exuberant. Over the past decade, shares have risen by more than 4,000%. Now armed with a $200 billion market cap, however, its biggest days of growth are behind it. That’s why investors are scrambling to find the next Netflix.
The most obvious path is to find a video-streaming service that emulates Netflix’s strategy. But this course of action would be a mistake. Netflix’s biggest advantage was never being a video service but rather a platform.
Platform businesses are the perfect choice for growth investors. When done right, these are the types of stocks that can rise more than 4,000% in a decade, turning $10,000 into $400,000.
Scouring the market for early-stage platform businesses is the best way to find the world’s next Netflix. One Canadian stock in particular looks like a fantastic choice.
Forget everything you know
Like most people, you may associate BlackBerry with its former glory as a smartphone manufacturer. In 2008, it controlled 20% of the entire global market, only to be demolished by the likes of Apple. Over the past decade, BlackBerry has seen its revenue base shrink dramatically. Today, it doesn’t manufacturer a single smartphone.
If BlackBerry doesn’t make smartphones, what does it do?
You may remember that long after consumers ditched BlackBerries, executives, politicians, and celebrities were still using the phones. That’s because BlackBerry was the leader in cybersecurity. Its devices were clunky to use, but they were more difficult to hack. In recent years, the company has leveraged this reputation to create a powerful security platform.
Any device connected to the internet is capable of being hacked. For better or worse, the number of connected devices worldwide continues to explode. The Internet of Things alone launches billions of connected devices every year.
Some devices, like autonomous vehicles, will require extreme levels of security. A breach could be devastating, even deadly. “The more connected cars get, the more we’ll need to depend on high-quality security — especially when dealing with the cloud,” notes Engadget.
This is the next Netflix
Today, BlackBerry’s security platform generates nearly all of its revenues. For years, the company shrank, but now it’s growing again. You’ve never heard of its product line because they’re mostly sold to manufacturers.
Consider BlackBerry’s QNX platform for connected vehicles.
“We are in the midst of a pivotal moment in the evolution of the car,” the company believes. “The electronic architecture of the vehicle is evolving from being hardware-driven to software-defined. Software is truly driving the transition to next generation automotive architectures of connected and autonomous cars.”
Everyday consumers don’t realize it, but BlackBerry’s QNX platform is embedded in 150 million vehicles worldwide. It’s included in seven of the top seven car brands.
What makes this product a platform? Late last year, BlackBerry partnered with Amazon to incorporate its AWS service. Now, car manufactures can build and monetize new capabilities. “The system will allow automakers to run a common software platform for vehicle systems like engine controllers, vehicle trackers (TCUs), and digital cockpits,” notes Engadget.
We’re in the early stages of autonomous vehicles, but the need for security will be paramount. With an early lead, and now the direct backing of Amazon, BlackBerry is positioned to capitalize. Its new platform approach — which companies like Netflix, Google, and Facebook have turned into gigantic businesses — should allow the company’s growth to go exponential over the coming years.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. David Gardner owns shares of Amazon, Apple, Facebook, and Netflix. Tom Gardner owns shares of Facebook and Netflix. The Motley Fool owns shares of and recommends Amazon, Apple, Facebook, and Netflix. The Motley Fool recommends BlackBerry and BlackBerry and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. Fool contributor Ryan Vanzo has no position in any stocks mentioned.