There was a time, not too long ago, when an investor could treat IAC as a collection of binary early stage bets anchored by a few more mature and profitable entities. To most, IAC’s 12% passive minority stake in MGM, acquired near the COVID lows, was a weird one-off opportunistic gambit that could be marked to market. The real diligence was saved for Angi’s, DotDash, and Vimeo. I don’t think many felt compelled to deep dive into casinos because like, whatever, the $1bn MGM investment comprised just ~9% of IAC’s market cap at the time and it felt like most of the upside was going to come from IAC’s digital assets, not a passive minority stake in a mature brick-and-mortar casino operator. Psych!! Now Angi’s is melting away as its fixed price offering, launched to great fanfare 2-3 years ago, struggles to find product-market fit. DotDash no longer expects to hit its $450mn EBITDA target next year given the weakness in brand advertising. Vimeo has lost ~90% of its market cap since being spun off last May, as losses have widened, growth has dramatically decelerated off tough COVID comps, and investors have soured on unprofitable growth concepts. Meanwhile, MGM shares have nearly doubled from the ~$17 price at which IAC first accumulated shares in 2q and 3q 2020. IAC has since added to its MGM stake, first at $45 and more recently in the low-$30s. With valuations in digital growth assets wrecked and its own stock price sliced in half, IAC could have opportunistically acquired another digital lottery ticket or more aggressively repurchased (more of) their own shares. But no. They increased exposure to MGM instead. Today, the $2.1bn MGM position accounts for 35% of IAC’s market cap, making it the second most valuable asset in the IAC complex after DotDash.
IAC and MGM
IAC and MGM
IAC and MGM
There was a time, not too long ago, when an investor could treat IAC as a collection of binary early stage bets anchored by a few more mature and profitable entities. To most, IAC’s 12% passive minority stake in MGM, acquired near the COVID lows, was a weird one-off opportunistic gambit that could be marked to market. The real diligence was saved for Angi’s, DotDash, and Vimeo. I don’t think many felt compelled to deep dive into casinos because like, whatever, the $1bn MGM investment comprised just ~9% of IAC’s market cap at the time and it felt like most of the upside was going to come from IAC’s digital assets, not a passive minority stake in a mature brick-and-mortar casino operator. Psych!! Now Angi’s is melting away as its fixed price offering, launched to great fanfare 2-3 years ago, struggles to find product-market fit. DotDash no longer expects to hit its $450mn EBITDA target next year given the weakness in brand advertising. Vimeo has lost ~90% of its market cap since being spun off last May, as losses have widened, growth has dramatically decelerated off tough COVID comps, and investors have soured on unprofitable growth concepts. Meanwhile, MGM shares have nearly doubled from the ~$17 price at which IAC first accumulated shares in 2q and 3q 2020. IAC has since added to its MGM stake, first at $45 and more recently in the low-$30s. With valuations in digital growth assets wrecked and its own stock price sliced in half, IAC could have opportunistically acquired another digital lottery ticket or more aggressively repurchased (more of) their own shares. But no. They increased exposure to MGM instead. Today, the $2.1bn MGM position accounts for 35% of IAC’s market cap, making it the second most valuable asset in the IAC complex after DotDash.