IAC's Hidden Gems: Unlocking Value in MGM Resorts and Angi's Spinoff

Investors often overlook the power of hidden assets and strategic renewal. For IAC/InterActiveCorp (NASDAQ: IAC), the combination of its undervalued 23% stake in MGM Resorts International (NYSE: MGM) and the recent spinoff of Angi Inc. (NASDAQ: ANGI) creates a compelling opportunity to unlock latent value. Paired with the return of founder Barry Diller to active leadership, this dual catalyst positions IAC for a 48% upside potential in the next 12–18 months.

The Undervalued MGM Stake: A Cash-Flow Machine in Disguise

IAC's 23% stake in MGM Resorts represents a $2.3 billion asset as of July 2025 (based on MGM's $10.08 billion market cap). However, this stake is severely undervalued relative to its intrinsic worth. MGM's stock trades at just 3.3x its current property value, a metric that fails to capture its long-term growth drivers:

1. Digital Dominance: MGM's BetMGM and LEO platforms are cornerstones of its $417 million digital revenue stream, with 50 million members in its MGM Rewards program.
2. Geographic Diversification: Operations in Las Vegas, Macau, and emerging markets like Japan and Dubai provide insulation from regional downturns.
3. Share Buybacks: MGM has reduced its float through aggressive repurchases, a trend that should continue as free cash flow improves.

Despite these strengths, MGM's valuation lags behind peers. For instance, Las Vegas Sands trades at 7.1x its property value, while Wynn Resorts commands 6.8x. If MGM's multiple expands to just 5x its asset value, IAC's stake alone would gain $650 million in value—15% upside from current levels.

Angi's Spinoff: A Fresh Start for a Turnaround Story

The March 2025 spinoff of Angi Inc. marks a pivotal moment for both companies. While Angi's stock dropped 40% post-spin due to near-term revenue declines, its strategic shift to quality-over-quantity is bearing fruit. Key catalysts include:

• Operational Improvements: Pro retention rates rose 15%, while adjusted EBITDA margins expanded to 11% in Q1 2025.
• Cash Reserves: Angi holds $416 million in liquidity, enabling share buybacks (10% of outstanding shares repurchased year-to-date) and R&D investments.
• Intrinsic Value Upside: Analysts project Angi's stock could rise to $28.88—a 80% premium to its June 2025 price—should its marketplace stabilize.

While Angi's short-term challenges remain, its 42% average analyst target implies a $320 million increase in IAC's post-spin equity value. Combined with MGM's potential, this creates a total upside of 48% for IAC shareholders.

Barry Diller's Return: Leadership That Delivers

The return of Barry Diller to an active role as IAC's executive chairman adds critical credibility. Diller's history of turning around undervalued assets—from Expedia to Match Group—aligns with his stated focus on “forever assets” like MGM. His hands-on approach, including board seats at MGM and Angi, ensures disciplined capital allocation and strategic execution.

Risks to Consider

• MGM's Macau Exposure: Gambling restrictions in Macau could pressure earnings.
• Angi's Competitor Threats: Rivals like Thumbtack are gaining traction in digital home services.
• Market Sentiment: Cyclical industries like gaming and online marketplaces face macroeconomic headwinds.

Investment Thesis: Buy IAC for 48% Upside

The math is clear: IAC's $2.3 billion MGM stake and Angi's $400 million equity value represent ~70% of its current market cap. With both assets undervalued and strategic leadership renewed, IAC is poised for a valuation re-rating. Add in its $800 million net operating loss (NOL) carryforwards and a 1.8% dividend yield, and the risk-reward profile tilts sharply upward.

Rating: Buy
Target Price: $72 (48% upside from July 2025's $48.60)
Hold Until: Q4 2026, when MGM's digital growth and Angi's turnaround milestones become clearer.

Investors seeking asymmetric upside in overlooked assets should consider IAC now. The pieces are in place—valuation gaps are closing, and Diller's leadership ensures execution. This is a rare opportunity to buy a portfolio of hidden gems at a discount.