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Government data showed that retail sales dropped about 0.6 percent in July. This was a larger decline than analysts expected, with much of the pullback happening at online retailers.
This matters for IAC because its primary business is now a digital media and publishing group that earns money from advertisers. When consumers spend less online, retailers often cut back on the money they pay to show ads on sites like those owned by IAC. Since the company's turnaround plan depends on growing this ad revenue, a broader slowdown in shopping is a trend to watch.
Source: Bloomberg Markets and Finance
The company reported a profit of $6.68 per share, which was far higher than the loss analysts were expecting. Revenue of 440 million dollars also came in slightly ahead of targets. These results are the first look at the business since it began stripping away secondary assets like Care.com to focus entirely on its digital publishing brands.
The big profit number is likely skewed by paper gains on its investment in MGM Resorts rather than just cash from operations. However, the core media business is showing it can hold its own. For long-term owners, the focus remains on whether these digital brands can grow their ad revenue enough to justify the stock price while the company cuts 40 million dollars in overhead costs.
The company is reportedly in talks with MGM Resorts following an offer from Barry Diller to buy the casino giant. IAC already owns a massive stake in MGM, which currently acts as a major source of value for the stock. A full merger would be a massive shift in strategy, moving the company from a media-focused holding firm into a major casino operator.
This move would complicate the plan to lean out the company into a focused media business. While owning the casinos outright could provide more cash, it also adds the heavy debt and physical costs of running resorts. We are watching to see if this is a serious bid or a way for IAC to influence how MGM is run to protect its existing investment.
Source: WSJ
Management has a habit of clearing the bars set for them, beating analyst expectations in each of the last two quarters. This suggests they have a good handle on their costs during this transition.
| Expectation | |
|---|---|
| EPS | $-0.23 |
| Revenue | $447M |