Shares of Netflix shot up Monday after hedge fund manager Whitney Tilson told CNBC that he expected the stock of the Los Gatos, Calif.-based company to continue on its upward trajectory.

As long as Netflix has dominant market share and no new competitors to erode its competitive position, we see no reason why Netflix business won't grow at 30 to 40 percent -- the same rate as the industry, Tilson told CNBC.

Shares of Netflix were up 12.57 percent to $97.20 in mid-afternoon trading.

Netflix's share price sat at about $300 until last September, when the company announced it planned on splitting up its online streaming and DVD-by-mail services and hiking prices up to 60 percent. Although the company backtracked on its decision to split up the businesses, the price hikes have stayed in effect.

However, the damage had been done to the stock, which fell to a 52-week low of $62.37. Yet the stock has been on the upswing in the last week following a report that Netflix subscribers watched over 2 billion hours of TV shows and movies in the fourth quarter of 2011. The stock is now up nearly 40 percent since the beginning of 2012.  

Tilson said Netflix's stock price drop was an overreaction, and he expects company shares to significantly rebound.

Other investors also believe things are looking up for Netflix. A majority of investors who took place in a poll by TheStreet expect the stock to trade at around $150 in 2012.

Tilson told CNBC that Netflix, with its market capitalization at around $5 billion, could be a prime takeover target. There has been speculation over the last several months that companies such as Amazon, Verizon and Yahoo have been interested in taking over the company, however those reports have not been sustained.

Separately, Netflix on Monday launched its streaming service in the U.K. and Ireland, pitting it against Amazon's LoveFilm. Netflix's unlimited-streaming packages will cost $9.24 and $8.90 a month in the U.K. and Ireland, respectively.