IAC/InterActiveCorp - Deep Dive
"Real winners don't predict the future, they adopt to it."
What Attracted Me To The Company?
Margin of Safety Price?
Disclaimer is at the end.
IAC is home to dozen of popular online brands and services used by millions of consumer each day. I think of IAC as Internet Version of Berkshire Hathaway, except instead of always keeping all of the companies under their wing IAC lets the “mature” companies spread their wings and fly away via spin offs.
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So I guess it’s not really like Berkshire…
2. What Attracted Me To The Company?
The whole idea of building, making mistakes, admitting them, and learning from them, really resonates me with me and after I read all of the letters that Joey Levin put out (and re reading some of them) I got hooked on the idea that this company has the most amazing moat ever!
What is that? (you might ask me)
Moat of courage.
Courage to not being afraid of creating something that no one else has done before or wants to do and at the same time keep evolving (and adapting to the new challenges/technologies/competitors), learning from mistakes, and at the same time thinking long term.
Maybe I wouldn’t call it a moat if company only did it once or twice, but IAC has been able to do it time and time again, showing that its not luck but hard work and willingness of management to be open minded and determination to do what needs to be done (no matter how long that might take as long as at the end the shareholders will be greatly rewarded)
All because of the right way of building “from the ground up” the business and the culture that was created with the help from Mr Diller.
3. Short History
IAC started as Silver King Broadcasting Company in 1986 and by 1992 was spun off to Home Shopping Network (HSN) shareholders under the name of Silver King and in 1995 Barry Diller acquired control of Silver King.
The deal was backed by largest shareholder Liberty Media.
Take a quick break to point out that already from the start of IAC’s journey, company developed the roots of spinning off and was given blessing by Liberty Media (AKA John Malone)
Through out the 1995-2000 company went through many changes via M&As (into the Internet Age) from physical assets into online assets and in 2004 was (again for the millionth time) renamed into what we now know as IAC (IAC/InteractiveCorp).
Two Fun Facts about IAC*:
1) What do Match Group, Expedia, Live Nation, LendingTree, and TripAdvisor have all in common?
They all been spun out from IAC!
2) As with developing companies IAC is known for nurturing and developing great leaders that go hand in hand with great businesses which are both courtesy of IAC and it’s culture.
*okay okay fine, maybe they where not so much as “fun facts” but facts for sure.
Currently IAC has four business segments.
Which are Angi, Dotdash, Search, and Emerging+Other.
ANGI Homeservices Inc. or simply Angi (trades under $ANGI) is a market place that connects quality home service professionals across 500 different categories, from repairing and remodeling to cleaning and landscaping, with consumers. Over 240,000 domestic service professionals actively sought consumer matches, completed jobs or advertised work through Angi’s platforms and consumers turned to at least one of our brands to find a professional for many projects.
Within Angi there are two operating segments: (1) North America (United States and Canada), which primarily includes the operations of HomeAdvisor, Angie’s List, Handy, and HomeStars, CraftJack and (2) Europe, which includes the operations of Travaux, MyHammer, MyBuilder, Werkspot and Instapro.
Angi’s revenue is primarily derived from consumer connection revenue, which consists of fees paid by HomeAdvisor service professionals for consumer matches (regardless of whether the service professional ultimately provides the requested service) and revenue from completed jobs sourced through the HomeAdvisor and Handy platforms.
Dotdash is one of the largest and fastest growing content publishers on the Internet, reaching over 100 million people each month (that's more than 35% of the U.S. online population). Dotdash brands are verywell, Investopedia, the balance, the spruce, Simply Recipes, Serious EATS, BYRDIE, BRIDES, MYDOMAINE, Lifewire, tripsavvy, Liquor.com, Treehugger, and last but not least ThoughtCo.
The Verywell family of brands, including Verywell Health, Verywell Fit, Verywell Family, and Verywell Mind, take a human approach to health and wellness content and are a welcome alternative to hyper-clinical health sites. 38.5 million people in the. U.S. use Verywell sites each month to feel better and be healthier.
Investopedia simplifies complex financial information and decisions so that its readers have the confidence to manage every aspect of their financial life. Investopedia reaches nearly 20 million people each month.
The Balance family of brands, including The Balance, The Balance Careers, and The Balance Small Business, deliver clear, practical, and straightforward personal financial advice to 17 million people in the U.S. each month.
The Spruce family of brands, including The Spruce, The Spruce Eats, The Spruce Pets, and The Spruce Crafts combine inspiration with how-to advice to help users create homes they love. Collectively, The Spruce sites reach over 33 million people in the U.S. each month.
Simply Recipes, one of the original food blogs, helps over 9 million people each month get easy, delicious food on the table for themselves and their families.
Serious Eats delivers trustworthy recipes, rigorously tested techniques, and food science content to over 4 million hungry readers each month.
Byrdie is dedicated to all things beauty, inside and out. From hair and makeup to health and wellness, Byrdie takes a fresh, no-nonsense approach to feeling and looking your best.
Brides inspires and guides over 4 million monthly users as they make decisions from pre-engagement through the honeymoon. Brides is committed to bringing you an inclusive look at the world of weddings, with every type of couple, every type of wedding, and every type of celebration.
MyDomaine makes an aspirational life achievable - and affordable - with curated home-design inspiration, quick and fresh recipes, and healthy relationship advice that awaken a life well lived. MyDomaine reaches 1 million people each month.
Lifewire provides helpful, actionable tech tips, advice, and answers, without confusing jargon. Lifewire helps over 5 million people in the U.S. each month get the most out of their technology.
TripSavvy delivers curated expert advice for family and vacation travelers. We help nearly 4 million people in the U.S. each month have the best travel experiences.
Liquor.com is dedicated to good drinking and great living. We inspire, entertain and educate anyone - and everyone - interested in what happens in the glass and out of it.
TreeHugger is the leading media outlet dedicated to driving sustainability mainstream. TreeHugger provides its users a one-stop shop for eco-friendly news, solutions, and product information.
ThoughtCo is one of the largest and most comprehensive learning, information, and education sites online. ThoughtCo helps over 6 million people in the U.S. a month become lifelong learners.
I highly recommend checking each individual website one by one.
Dotdash revenue consists principally of display advertising revenue and performance marketing revenue.
Search segment consists of two parts Ask Media Group and Desktop business (Ask Applications).
Ask Media Group primarily provide general search service. Ask Media Group’s websites include, among others, Ask.com, Smarter.com, Consumersearch.com and Shopping.net, each of which contains a mix of search services and/or content targeted to various user or segment demographics.
Desktop business is a provider of advertising-driven desktop applications.
Although declining (I would even say dying) business segment “SEARCH” is a free cash flow providing machine and so keeps feeding other developing (next gen?) segments.
Ask Media Group revenue consists principally of advertising revenue generated principally through the display of paid listings in response to search queries, as well as from display advertisements appearing alongside content on its various websites and, to a lesser extent, affiliate commerce commission revenue.
Desktop revenue largely consists of advertising revenue generated principally through the display of paid listings in response to search queries.
Whenever IAC talks about paid listings via search queries they are most likely talking about Google paying them via ads.
EMERGING & OTHER
This segment is the one I’m mostly excited about…
E&O mainly consists of Bluecrew, Care.com, Mosaic Group, Daily Beast, Vivian and NewCo.
Bluecrew is the first hourly workforce-as-a-service (WaaS) provider: combining W-2 labor, a workforce management platform, and data + analytics for workplaces who have hourly workers and fluctuating demand. Unlike typical gig platforms, all Bluecrew Members are W-2 classified workers, eligible health benefits and protections such as sick leave and workers compensation.
Care.com is the leading online destination for families to easily connect with caregivers for their children, aging parents, pets and homes and for a wide variety of caregivers to-easily connect with families.
Mosaic Group is a developer and provider of global subscription mobile applications. Mosaic Group's portfolio of 40+ mobile apps span fitness, lifestyle, entertainment and utility categories and include popular titles like Daily Burn, RoboKiller, iTranslate and NOAA Weather Radar Live: Clime.
The Daily Beast
The Daily Beast is a website dedicated to news, commentary, culture and entertainment that publishes original reporting and opinion from its roster of full-time journalists and contributors. With over a decade of breaking impactful stories, the Beast’s multi-media reach includes chart-topping podcasts, millions of engaged social followers, a dedicated app, heavily consumed newsletters, an expansive membership program, and much more. The Daily Beast reaches more than 1 million readers a day.
Vivian (previously NurseFly) is the first transparent healthcare job marketplace via browser or app. Vivian offers all kinds of healthcare jobs - permanent, per-diem, local contract, and travel - for all kinds of healthcare workers: registered nurses, therapists, and allied professionals. Big factor with Vivian is the transparency, Salary Insights - see the average pay for your discipline, specialty, and location.
Vivian changes the game.
Apple App Store reviews
Google Play Store reviews
For employers, Vivian helps fill roles 50% faster than traditional recruiting practices and at a fraction of the cost, saving them millions of dollars and helping alleviate labor shortages in healthcare. Currently facilitated over 1 million job applications through its marketplace with 300,000+ qualified healthcare professionals, actively looking for work.
Newco is IAC’s incubator platform based in Brooklyn (side note I should probably try checking it out). It’s kind of a secret right now, not much is know except that Newco has five discrete early stage products and that portfolio spans social gaming, telemedicine, home services, social networking and online recruiting.
Both Wilson Gibbons and Casey Gibbons founded and ran ran Friends & Family, an innovation studio that partnered with corporate clients like Nike, Ikea, Lowes, Starbucks, and the LA Dodgers to test and build new ideas. So pretty much anything is possible with this one.
For IAC, I will separate “Management” into two segments:
2) Business Management
Barry Diller is the Chairman and Senior Executive of IAC. From 1995 to late 2010, Mr. Diller served as the Chairman and the Chief Executive Officer of IAC. From October 1984 to April 1992, Mr. Diller served as Chairman and Chief Executive Officer of Fox, Inc. and was responsible for the creation of Fox Broadcasting Company in addition to Fox's motion picture operations.
Barry Diller, his spouse, and his stepson collectively hold 5,789,499 shares of Class B common stock representing 100% of the outstanding shares of Class B common stock. Together with shares of common stock holdings collectively represent approximately 41.4 % of the total outstanding voting power of IAC and on November 5, 2020 Mr Diller and his family went into voting agreement to basically give Joey Levin the right to do whatever is necessary as long as its in the best interest of the shareholders (I left out all of the lawyer talk out).
Barry Diller owns about 6.80% of total outstanding shares
Don’t get this wrong, Mr Diller still “runs the show” and must approve of everything before it gets executed but he trusts Joey to make the right decisions.
Which brings us to Joseph M. Levin (Joey Levin). Joey Levin is the Chief Executive Officer of IAC. Prior to this, Mr. Levin held many positions all in or around IAC which gives him great understanding what IAC is all about.
Mr. Levin is present Chairman of the boards of Vimeo and Angi Inc. and currently serves on the Board of Directors of Match Group Inc., Turo and MGM Resorts International. All important seats, as we will see later on that Joey has his hands around everything that IAC touches!
Joey Levin owns about 3.68% of total outstanding shares.
2) CEOs/Founders of IAC’s Businesses
All of the companies that are under IAC’s umbrella are ran by either founders or are carefully selected for the CEO job of that company because IAC believes those individuals are best/greatly suited for the task.
Oisin Hanrahan - Angi
Neil Vogel - Dotdash
Timothy Allen - Care.com
Zachary Roseman - Mosaic Group
Heather Dietrick - The Daily Beast
Stephen Avalone - Bluecrew
Parth Bhakta - Vivian Health
Marissa Wilson Gibbons & Casey Gibbons - Newco
Shane McGilloway - Ask Media Group/Ask Applications.
Since IAC has many different companies under it’s wing that means there are many competitors that they must “defend against”, which could sound problematic until you really dive deep into what is going on…
Since that’s what everyone is talking about plus that is the one IAC is focusing on as the major with the biggest problems.
Competitor’s of Angi are (and we will dive in on each one afterwards) Google, Facebook, Other Tech Companies (OTC), “Word of Mouth” (WoM), and “Failure to Execute” (FtE).
First Google (Google is a friend and a foe of IAC) or more specific google’s search and ad segments. Google makes money via ads and many service professionals (SPs) could and are just place ads on google and not even worry about Angi and basically cut Angi out. The problem with that is SPs don’t know if and when they will receive any customers (via ads) and since Google is also not in the niche the way Angi is. Google’s whole passive approach is to provide ads and not actually help anyone in the nitty gritty level like what Angi is trying to do. Another minor concern is that Google could challenge Angi and take away the market, but as I mentioned before (just to be sure) Google is not this market, it is just not that lucrative for them to do.
SPs could (and are) easily just use both Angi and Google ads to get more customers (Angi is actually try to remove this pain point but this we will discuss later on).
Second competitor that I’m personally more worried about is Facebook. More specifically its Marketplace and network. SPs could also use FB’s Marketplace to show their services to local FB users and advertise this way (Dealers sell cars so why not plumbing and roofing?) and with combination of WhatsApp chat and Instagram, basically get much better deal for the “buck” via FB than Angi. The problem with this is (for now) SPs must be tech savvy and most are not so much. But the next generations are and will be and so SPs can implement IG, FB Marketplace, Google ads, TikTok or whatever the next big passive thing that uses algorithms will be in the next five plus years and doesn’t really require a lot of time but does require desire to get on the social platforms and advertise (which I believe will be critical for survivor of future generations).
Next on the list are OTCs, there are many OTC’s like NextDoor, Yelp, or other tech companies that are a threat but not a major one because I believe Angi is way ahead and way more committed on solving this pain point than the likes of NextDoor.
I don’t believe this market is winner takes all, but more like winner takes most.
Next one is also very important Word of Mouth. Once SPs get the lead via Angi, they can easily just give phone number or business card to the client and for the future references clients don’t need to use Angi but can just directly call that SP. Angi acknowledges this issue and is currently working on solving this by being a true intermediary by providing needed services to customers and paying for this services to SPs.
Last but not least is the one that not too many talk about and that is Failure to Execute this ginormous project. It is hard enough to satisfy one party (and it doesn’t really matter what that would be) but when you try to satisfy two parties and when does two parties want to basically “rip off” or “get the best deal” from the others IS A GINORMOUS pain point, that Angi might not be able to fulfill…or maybe it will.
The reason I think it’s 50/50 because it’s one thing to build an app that connects two people to “fall in love” but its also was a big project to connect one person with their destination and via hotel, flight, and a rental car and lets just say IAC took care of that.
When it comes to Dotdash, it’s competitors are other online (web) publishers and advertisers, so anything everything that takes away eyeballs of the readers/customers. You could say the whole internet, but not really since there are plenty of TAM for everyone on the web.
Ask Media Group’s major competitors are Google, Yahoo!, and Bing.
But let’s be honest it’s pretty much only Google when it comes to competition…who uses Bing? right? Just kidding…not really.
Since E+O is really not the major segment, I wont be going into details of the competition here, simply because there is just way too much of it and some businesses are constantly evolving or have similar competitors as other already developed segments/companies.
Really too much unknown to speculate on potential major competitors.
When it comes to IAC and it’s businesses, the theme is usually the same around advertisements, eyeballs, or taking business concept from offline to online.
7. Past Performance
It is well known that past great performance is in no guarantee for future profitable results and yet when you look at IAC it’s hard to argue that with ten plus successful businesses executed in different sectors with the same theme of some kind of marketplaces, they will most likely (not guarantee) will create another great marketplace company.
Over the last twenty plus years IAC has build and spin out companies like Match Group ($MTCH), Expedia ($EXPE), LendingTree ($TREE), TripAdvisor ($TRIP), and Live Nation ($LYV)
If it’s hard to see here is a written breakdown:
EXPE - 480.42% (19.20% CAGR over 10 years)
TREE - 3,147.34% (41.58% CAGR over 10 years)
TRIP - 41.66% (3.54 CAGR over 10 years)
MTCH - 55.56 (4.51% CAGR over 10 years)
LYV - 960.10% (26.60% CAGR over 10 years)
I’m not including $ANGI and $VMEO because it hasn’t been 10 years (or even five ) so they still have time to prove themselves (although not looking so great right now).
As said before no guarantee they will be able to execute in the future, but I would say based on the past, probability of them executing well into the next 10 years are pretty good.
IAC have a few options when it comes to unlocking hidden value, those are Angi, Dotdash, Emerging+Other (wild cards), and on top of that stakes in Turo and in MGM.
Let’s take a look at all by one by.
is trying to do the impossible, by trying to keep both frugal buyers and SPs happy and while also keeping them in their system, and with the implementation of the new business model (fixed price model) they actually have a shot, it just might take much longer than everyone believes and so it’s not exciting and “hot”.
With all of the data they have, if anyone has a chance in creating the marketplace (as of right now) it’s Angi but they are fighting an upwards battle. (This is one of the reasons I’m not long $ANGI but I' am long $IAC).
I also see a possibility of IAC just selling $ANGI’s stake or shifting to something new. I love the fact that IAC is not scared of pivoting or changing things around when they don’t work, if they are willing to keep doing it at some point something great should happen, I just don’t have any time frame on it.
is starting to make money and with so many good/great brands (Investopedia and verywell) I think it’s a potential to replace “Search” as the FCF generator that can/will power future expansions and risk taking from E+O segment. Dotdash prioritizes quality over quantity and in the long run that pays dividends.
is where it’s at. I can’t (and I wont) say I know which company out of the E+O will succeed but they are all very promising and different (thats the good part).
Many people on twitter are trying to put a price tag on everything that is in E+O but I think it’s pretty silly thing to do since most numbers are unknown and there is a lot of chances to come for sure that most will not foresee.
All of the companies in the E+O have a great chance at (if needed) replacing $ANGI for the IAC’s stock to re-rate and be much higher then where it is right now. If you ask me to name, I would say Bluecrew, Care.com, and Vivian could potentially get their own segment.
Daily Beast maybe gets moved into Dotdash?
Newco is the unknown beast.
Turo is the world's largest peer-to-peer car sharing marketplace.
Turo did not want to sell itself to IAC, so IAC became the largest shareholder with rights to expand its ownership over time by investing $250 million in Turo.
Pre-pandemic Turo was growing 2x YoY, with its newest international markets (UK and Germany) growing even faster at 8x YoY. Due to pandemic things have not been as smooth and as of August 2021 they are no longer in Germany. But company did have its first ever profitable quarter for Q1 of 2021. They increased their revenue by seven percent during the coronavirus pandemic as travel habits shifted away from long, cross-country and international trips to shorter, more local getaways.
Turo did file for confidentially for IPO, so end of 2021 or at some point 2022 should be interesting. There are buzz around that Turo potentially worth billions of dollars, I don’t know about any of that but again definitely adds to the bull case.
IAC invested in MGM Resorts International via open markets in 2020 at the price of $19 (as of September 2021 $MGM is trading at $42).
Side note, the way IAC shows they can be flexible with their investment style shows the company is opportunistic, and you can’t say that about most publicly traded companies.
As always IAC is playing long term game, looking past pandemic (whenever that might be) MGM looked like a good opportunity and with IAC’s knowledge of online business, I think there is definitely potential for something interesting to happen.
And if not, IAC can always sell their publicly traded shares of $MGM and buy back their own shares or take over/buy into other publicly traded companies (we now know they are not afraid to do so).
(But thats more like extreme case)
Back to more positive thinking…
Time after time, when opportunities knock IAC opens the door.
Not as many as in bull case, but there are some concerns when it comes to the future of IAC those are…
Angi is number one and I have discussed in some length regarding execution and competition from likes of Google and Facebook in “Competition” segment. If Angi will become sole focus of IAC, we will have a problem. Yes its a hard challenge but if IAC can’t find solution maybe its best to move on, if they can move on that’s good and if not well thats the bear case (with addition to everything else that’s been mentioned).
Google is part of #1 and it’s also #2. Generally IAC relies on google search/ads for profits and if there is something to happen with the relationship or major change in algorithm there could be a problem that IAC just won’t be able to solve just in time.
Although Joey has signed contract for another 10 years with IAC, there is a double possibility (although very minor) that with passing of Barry…Joey will play some kind of wild card and resigns or worse something happens to both Barry and Joey and which point company wont really know what to do (again minor and unlikely but the chance is still there)
Failure in investments via Turo/MGM or anything in E+O segment that will make company start burning too much cash or put on more unnecessary debt to keep it self alive is although unlikely is still a possibility.
Again the biggest bear case for IAC (right now) is $ANGI and the failure to execute on the promises that come with Angi with Google/FB worries as a cherry on top.
I’m not 100% sure what everyone would like to see in “Financials” segment, so I will put what I think is “useful” but I would definitely appreciate some feedback and guidance to make this segment better.
As I said before I don’t have any degrees or financial background (except for what I learned myself) so not sure what everyone usually look at. I DO UNDERSTAND the usual stuff like Income Statement, Balance Sheet, and Cash Flow Statement, but I don’t understand why I need to share it here if it’s usually will be outdated and also it’s easily available for everyone to go and check out.
But I might be wrong and everyone would like that to be included. Feedback is critical in this part! Thank you.
For now here is what I got…
Would the following (below) be desired or is it too much info?
Something to add? Something to remove?
10. Personal Touch
Currently none of the gurus that I follow own any significant amount of $IAC shares.
Margin of Safety Price?
For me personally anything below $130 is when I would really like to start going “heavy”.
Currently I do not have price target for IAC , lots of things need to develop to unlock more value.
Currently for me personally I’m looking to hold for at least three to five years (to let as many things play out as possible) but preferable “holding time forever”
To wrap this all up, I think that IAC is one of those companies that will keep on giving as long as the management keeps it to their roots.
You don’t survive by being the same, you survive by constantly changing/evolving and not being afraid of trying new things.
I really wanted to go in more depth of each individual companies that Angi holds and also in more details into Dotdash’s companies but unfortunately I feel like that would post pone this deep dive for another few weeks of which I did not want to do, but other then that I think I included everything I wanted to (I think).
Also I do eat my own cooking so you can follow my journey via my portfolio at www.from100kto1m.com where I will discuss things in more details as the future unfolds…
I’m looking at IAC as one of the core holdings that I would like to hold for many many years and be amazed at how they evolve and what they will be able to create.
Otherwise thank you for reading and please share, like, and comment below. Your feedback is very important especially since this is the first post.
At the time of this publication, I do own shares of $IAC.
The information of this article (deep dive) is provided for informational and educational purposes only.
The information is not intended to be and does not constitute financial advice or any other advice, is general in nature, and is not specific to you. Before using this article’s information to make an investment decision, you should seek the advice of a qualified and registered securities professional and undertake your own due diligence.
None of the information in this article is intended as investment advice, as an offer or solicitation of an offer to buy or sell, or as a recommendation, endorsement, or sponsorship of any security, company, or fund. The company is not responsible for any investment decision made by you. You are responsible for your own investment research and investment decisions.
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