Updated Aug 11 at 4:04pm ET.
Follow IAC to never miss an important update.
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
Analysts recently adjusted their outlooks following a flurry of activity in early May. Most analysts, 28 of 33, rate the stock a buy, and the average target of $51 suggests an 11% gain from today's price.
IAC has a habit of delivering massive surprises, including a recent profit that was far higher than what analysts expected. It makes the quarterly numbers hard to predict but shows the business can still produce significant cash.
| Expectation | |
|---|---|
| EPS | $-0.23 |
| Revenue | $447M |