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IAC/InterActiveCorp Message Board

  • investora2z investora2z Nov 21, 2013 7:00 AM Flag

    Weak recovery

    The stock has recovered after the post-earnings fall. The volumes have not been great, but the important supports have held. The main reason for the drop was that the revenues came in below estimates. There was a modest 6% growth in revenues on a yoy basis, though there was a 5% drop sequentially. The EPS came in much better than estimates, even if one excludes the abnormal gains during the quarter. The net income increased by 138% on a yoy basis. However, an analyst on seekingalpha was particularly negative about the stock. He cited slow pace of growth and some data points which suggest 'diminishing perceived value' of IAC's offering. IAC is generating less revenue per eyeball, indicating less than optimal monetizing of the consumer base. This was attributed to the fact that the IAC's websites are not that suited for mobile viewing. Adjusting to the transition of increased usage of mobile devices is critical for most companies working in the space. IAC's dependence on Google is another factor to expect lower traffic in the future as Google updates its algorithm. The author also expects 2014 earnings estimates for Interactive to be lower. While it is true that IACI needs to do better on growth, one cannot underestimate the company or ignore its good performance over the years. Increased use of internet through mobile devices provides challenges, but can also be seen as a growth opportunity for the company to leverage. Companies usually look at new emerging growth segments to diversify revenue streams and bolster growth over the long term. Interactive invested in fantasy sports where Yahoo (YHOO), Comcast (CMCSA) and MGT Capital Investments (MGT) have put in their money. The drop in the stock price and increase in EPS has improved the valuations, but it is critical that the future quarters reflect management's efforts at achieving better operational metrics.

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    • Nice overview. Thanks.

      Another worthwhile mention is to keep your eyes on Aereo. If they continue to beat the media conglomerate lawsuits against them, this company will explode upwards and take IACI with them.

      Barry Diller is a clever guy who's been around the block hence I have full confidence that he will soon figure out how to move towards and monetize within the mobile world.


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