Should Oppenheimer’s MGM-Exposure Downgrade Require Action From IAC (IAC) Investors?

• Earlier this week, Oppenheimer downgraded IAC from Outperform to Perform, pointing to valuation concerns and the company’s growing dependence on its large MGM Resorts stake while key holdings like Care.com and Turo are still working through turnarounds.
• The downgrade also questioned IAC leadership’s reluctance to sell or repurpose its MGM investment, raising fresh debate over how much control the company really has over its own future value drivers.
• We’ll now examine how Oppenheimer’s concerns about IAC’s heavy MGM exposure could reshape the company’s broader investment narrative and risk profile.

Explore 28 top quantum computing companies leading the revolution in next-gen technology and shaping the future with breakthroughs in quantum algorithms, superconducting qubits, and cutting-edge research.

IAC Investment Narrative Recap

To own IAC, you have to believe in its ability to create value through capital allocation and turnarounds at assets like People Inc. and Care.com. Oppenheimer’s downgrade sharpens the near term focus on one key catalyst, how IAC handles its MGM stake, and one key risk, that IAC’s equity value and stock behavior are now closely tied to MGM’s fortunes. For now, the thesis around improving portfolio operations and capital deployment is intact, but more visibly intertwined with MGM.

The most relevant recent announcement is IAC’s ongoing share repurchases, with more than 11.6 million shares bought back for roughly US$551.0 million since 2020. That buyback activity highlights how much management leans on capital allocation to enhance shareholder value, which matters more now that external catalysts like redeploying the MGM position appear delayed and portfolio turnarounds in Care.com and Turo still need time.

Yet against this backdrop, investors should be aware that IAC’s growing reliance on a single external stake could...

Read the full narrative on IAC (it's free!)

IAC's narrative projects $2.5 billion revenue and $85.5 million earnings by 2028.

Uncover how IAC's forecasts yield a $45.62 fair value, a 17% upside to its current price.

Exploring Other Perspectives

Three Simply Wall St Community fair value estimates span a wide US$45.62 to US$177.63 per share, underscoring how far apart individual views can be. When you compare that spread with concerns about IAC’s heavy MGM exposure and limited near term catalysts, it becomes even more important to weigh several different perspectives before forming an opinion.

Explore 3 other fair value estimates on IAC - why the stock might be worth over 4x more than the current price!

Build Your Own IAC Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your IAC research is our analysis highlighting 2 key rewards that could impact your investment decision.
• Our free IAC research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate IAC's overall financial health at a glance.

Interested In Other Possibilities?

The market won't wait. These fast-moving stocks are hot now. Grab the list before they run:

• Uncover the next big thing with financially sound penny stocks that balance risk and reward.
• The end of cancer? These 29 emerging AI stocks are developing tech that will allow early identification of life changing diseases like cancer and Alzheimer's.
• These 15 companies survived and thrived after COVID and have the right ingredients to survive Trump's tariffs. Discover why before your portfolio feels the trade war pinch.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com