IAC - Embedded Expectations Analysis - 2020 10 20
IAC/InterActiveCorp (IAC:USA) currently trades at a historical high relative to Uniform earnings, with a 124.0x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management is concerned about their MGM investment, their ANGI business, and the potential of the Lowe's partnershipMoreover, management may have concerns about the growth of online gaming penetration and MGM's ability to take a meaningful share in the online betting market. Management may also lack confidence in their ability to offer valuable assets to MGM, secure more successful acquisitions, and maintain flexibility with their business actions. Furthermore, they may have concerns about the sustainability of ANGI's marketing environment, the impact of Google's competitive pressure on their offerings, and their partnership with Lowe's. They may also lack confidence in their ability to sustain service requests (SR) volume, execute their primary goals in this environment, and remotely hire salespeople
IAC/InterActiveCorp is a media and Internet company. The company has majority ownership of both Match Group, Inc. (Match Group or MTCH), which includes Tinder, Match, PlentyOfFish and OkCupid, and ANGI Homeservices Inc. (ANGI Homeservices or ANGI), which includes HomeAdvisor, Angie's List and Handy, and also operates Vimeo, Dotdash and The Daily Beast, among many other online businesses. The company's operating segments are MTCH, ANGI, Vimeo, Dotdash and Applications, which are also reportable segments, and within its Emerging & Other reportable segment, Ask Media Group, BlueCrew, The Daily Beast, College Humor Media and IAC Films.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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