IAC's Strategic Pivot: Why the Spinoff Positions It as a Value Investor's Dream

The market has yet to fully appreciate the transformation underway at IAC Inc. (NASDAQ:IAC). With the completion of its Angi spinoff on March 31, 2025, and Barry Diller's reassertion of active leadership, the company is now positioned to unlock value from its streamlined portfolio. A

underscores the strategic clarity of this move. For value-driven investors, IAC now offers a compelling mix of undervalued assets, capital reallocation potential, and catalysts that could drive significant upside.

The Undervalued Asset Portfolio: Closing the Intrinsic Value Gap

IAC's shares currently trade at $37.26, a 2% discount to its $38.15 intrinsic value derived from discounted cash flow and relative valuation models. This gap grows more compelling when considering the spinoff's implications. The Angi separation has not only freed up capital but also sharpened focus on IAC's remaining high-margin businesses, including Dotdash Meredith (owner of People and Food & Wine) and its MGM Resorts stake.

The stock's recent performance—trading within a $32–$55 range over the past year—has lagged behind its intrinsic value, creating a buying opportunity. Analysts' consensus price target of $54.08 (a 45% upside) suggests the market may soon catch up to the company's true worth.

Barry Diller's Return to the Helm: A Catalyst for Clarity

Barry Diller, IAC's chairman and legendary dealmaker, has reentered the spotlight as the spinoff's architect. His hands-on role—now overseeing IAC's core operations post-Angi—signals a return to his proven turnaround playbook. Diller has already prioritized two key initiatives:
1. Focus on high-growth assets: Doubling down on Dotdash Meredith's digital publishing strengths and leveraging its audience scale.
2. Activating capital flexibility: Using IAC's stock as currency for acquisitions or talent retention, now that Angi's separation has simplified its balance sheet.

The leadership transition also sees Joey Levin stepping down as CEO to lead Angi as its Executive Chairman. This split ensures Levin's expertise remains in play while Diller's vision guides IAC's new direction.

Freed Capital and Strategic Reallocation: The Spinoff's Hidden Bonuses

The Angi spinoff's immediate benefit is not just separation but capital reallocation. Key moves include:
- Simplifying the balance sheet: IAC's debt-to-equity ratio of 0.30 remains manageable, with cash flow redirected toward high-margin segments.
- Activating equity as currency: Post-spinoff, IAC's shares—now untethered from Angi's operational challenges—are better positioned to pursue acquisitions or incentivize growth.
- Focus on profitability: Diller has emphasized improving margins, particularly in legacy businesses like Care.com, by reducing overhead and prioritizing scalable services.

While IAC's market cap ($2.97 billion) has declined sharply since 2020, its post-spinoff structure now mirrors mid-cap peers like Liberty Media or Discovery, which have thrived through strategic asset repositioning.

Near-Term Catalysts to Watch

1. 2025 Earnings Guidance: IAC reaffirmed its outlook post-separation, with a projected diluted EPS of $0.43 for the year. A beat here could accelerate valuation re-rating.

Backtest the performance of IAC (NASDAQ:IAC) when 'buy condition' is triggered 5 trading days before quarterly earnings announcements and held until 20 trading days post-announcement, from 2020 to 2025.

1. M&A Activity: Freed capital could fund acquisitions in adjacent markets, such as vertical integration in digital content or hospitality tech (via its MGM stake).
2. Angi's Growth Trajectory: As an independent entity, Angi's push to expand pre-priced service offerings (highlighted by Levin) could drive cross-pollination of insights back to IAC's core operations.

Risks to Consider

• Market volatility: IAC's beta of 1.23 makes it sensitive to broader tech-sector swings.
• Execution risk: The success of Diller's strategy hinges on swiftly capitalizing on freed-up resources.
• Leadership dependency: The company's trajectory remains tied to Diller's health and Levin's Angi performance.
• Earnings-related trading risks: Historical backtests of a strategy buying 5 days before earnings and holding for 20 days post yielded a -38.66% total return from 2020–2025, with a peak drawdown of -52.51%, underscoring the volatility tied to these events.

Investment Thesis: A Value Play with Upside Catalysts

IAC's current valuation underestimates its post-spinoff potential. The $2.80 per-share beat in Q1 2025—despite a top-line decline—demonstrates operational resilience. With Diller's track record of turning around undervalued assets and a portfolio now focused on high-margin content and services, IAC could be primed for a multiyear recovery.

For investors, the $38.15 intrinsic value provides a floor, while the $54.08 analyst target offers asymmetric upside. The stock's current price-to-book ratio of 1.35 and low institutional ownership (88.9%, with some recent buying) suggest it remains overlooked.

However, investors should note that historical performance of earnings-timed strategies has been volatile: the backtested -38.66% return underscores the need for a patient, long-term perspective to mitigate short-term risks.

Recommendation: IAC is a speculative but high-reward opportunity for investors willing to bet on strategic execution. The spinoff removes distractions, and Diller's return signals intent to capitalize on the company's overlooked strengths. Those with a 2–3 year horizon may find this a compelling value play, though they must acknowledge the heightened volatility tied to earnings events.

In a market fixated on growth at all costs, IAC offers a rare chance to profit from a disciplined repositioning. The Angi spinoff isn't just a breakup—it's the first step in unlocking IAC's next chapter.