SAN FRANCISCO (MarketWatch) — Netflix Inc. shares ended 14% higher Wednesday after it became public that billionaire investor Carl Icahn had bought up 10% of the video-streaming and DVD-rental company’s shares. 
 
 Icahn Capital revealed in a filing with the Securities and Exchange Commission that it had acquired a stake in Netflix NFLX, -5.00% equal to about 5.5 million shares, with a value of almost $169 million. Icahn Capital and its affiliates said in the regulatory filing that they believe Netflix’s stock is undervalued, due to its position in the U.S. market and opportunities for growth overseas. 
 
 Yahoo's Mayer makes a media deal (4:14) Yahoo has struck a deal with Wenner Media, which lets the US Weekly and Rolling Stone publisher get its content on Yahoo's site and vice versa. (Photo: Getty Images) 
 
 Icahn, who in the past also has owned significant stakes in Yahoo Inc. YHOO, +1.84% and Motorola, is known buying up shares in companies that he sees as lacking in value and then either spearheading efforts to sell underperforming parts of those businesses, or hold his shares until the price has shown a decent amount of appreciation. 
 
 The filing hinted that possible options for Netflix could include either selling or breaking up Los Gatos, Calif.-based Netflix. 
 
 “[We] believe Netflix may hold significant strategic value for a variety of significantly larger companies that are engaging in more direct competition with one another due to the evolution of the Internet, mobile and traditional industry,” according to the filing. “The Reporting Persons are considering ways for the Issuer to maximize shareholder value but have reached no conclusion.” 
 
 Netflix officials didn’t immediately return requests for comment. 
 
 Netflix’s stock spiked more than 20% shortly after Icahn’s filing became public, leading to a brief halt in trading. After trading resumed, the shares pulled back from their high point, closing with a still-hefty gain to $79.24 
 
 Michael Pachter, an analyst who covers Netflix for Wedbush Securities and one of the most vocal critics of the company’s business and stock price, was critical of Icahn’s reasoning for taking a stake. “It’s OK with him thinking Netflix is undervalued, but as a strategic fit elsewhere he’s wrong,” he said. 
 
 Pachter, who has a sell rating and $4 target price on Netflix’s stock, added that the company has a good technology and customer base, but the only rival where it might fit isn’t likely interested in an acquisition. 
 
 “If you think that benefits any other company, only Amazon would benefit,” he commented. “But they’ve made the decision to build and not buy [a video-streaming service]. It’s not in their DNA.” 
 
 Pachter was referring to Amazon.com Inc.’s AMZN, +0.57% own video service, which the company offers to customers who pay $79 a year for the Amazon Prime delivery service. 
 
 Reuters Netflix' CEO Reed Hastings 
 
 Netflix has been the subject of controversy for more than year, stemming from its ill-fated decision in 2011 to split its streaming and DVD-rental businesses, and effectively raise prices on customers of both by about 60%. Plans to spin off the DVD operations into a separate company were later scotched. 
 
 Since Netflix’s shares peaked at $304 in July last year, the stock has fallen by more than 73%. Last week, the company disappointed investors with its earnings report, and cut the forecast for streaming subscribers this year to between 26.4 million and 27.2 million subscribers, which would be a gain of between 4.7 million and 5.4 million customers from a year ago. Netflix previously had predicted it would add 7 million new streaming customers this year. Read more about Netflix's quarterly results. 
 
 More from MarketWatch 

 However, each has their own reason not to want to buy the $4.5 billion market cap company. 
 
 The rumor that Microsoft could be interested in Netflix comes from its big push to make its Xbox console into an entertainment hub with its Xbox Live service. But Xbox already benefits from all that Netflix traffic on its consoles, so one might argue it doesn't need to make the purchase. (Read More: Microsoft Jumps Into Music With the Xbox.) 
 
 Another natural fit could be Amazon, as it grows its streaming video business with Amazon Prime. But many analysts have pointed out that Amazon already has a player in this space with Amazon Prime in the U.S. and LoveFilm in the U.K., and a history of building rather than buying. 
 
 Google could integrate Netflix into its Google TV venture and YouTube, but the subscription model doesn't exactly fit with YouTube's ad-supported approach. And Apple doesn't have an unlimited streaming option for iTunes, but if it wanted one, based on its track record and reach, it would likely opt to build rather than buy. 
 
 We'll see what changes Icahn has in mind to take advantage of the "dominant market position and international growth prospects" he cited. He could also push Netflix to expand overseas more quickly. We'll be watching to see what Icahn says — he's not shy and doesn't mince words. 
 
 —By CNBC's Julia Boorstin 
 
 @JBoorstin
– Netflix is having a busy week, and not only because storm-bound viewers streamed lots of movies. News broke today that billionaire financier Carl Icahn has bought a 10% stake in the company because he thinks it's undervalued, reports MarketWatch. Shares immediately surged 20%, prompting a temporary halt in trading, then closed the day up 14% at about $79. At CNBC, Julia Boorstin writes that the most interesting part of the filing is Icahn's contention that Netflix "may hold significant strategic value for a variety of significantly larger companies." Which means that he may eventually push Netflix to sell to Amazon, Apple, Microsoft, or Google. Or he may just push for a faster expansion overseas. "We’ll be watching to see what Icahn says," she writes. "He’s not shy and doesn’t mince words.