What happened
Week to date, shares of IAC (IAC 0.47%) were down 13% as of 10:46 a.m. ET on Friday, according to data provided by S&P Global Market Intelligence.
The holding company reported lower revenue in the second quarter than analysts anticipated, which weighed on the shares this week.
NASDAQ: IAC
Key Data Points
So what
The company started to see weakness in revenue in the fourth quarter of last year, and it's still struggling through a challenging business environment. The Dotdash Meredith segment, including results from People, Food & Wine, and Southern Living magazines, as well as its Angi home repairs business, reported double-digit year-over-year declines in revenue.
However, the silver lining of the quarter was improving profitability. After falling 25% year over year in the first quarter, the company's operating loss narrowed in the second quarter, improving by 67% year over year.
The stock was up over 45% year to date going into the quarterly report, so investors had high expectations for better results.
Now what
IAC is continuing to deal with a soft advertising market, but that will turn around eventually, which could make the stock a promising contrarian investment. The shares are trading at a cheap price-to-sales (P/S) ratio of 1.
The stock traded at a high P/S multiple of around 4.5 when IAC was reporting robust revenue growth during the pandemic. IAC may never grow revenue close to 40% again, but the stock is likely undervalued when averaging out how its media and home services business can perform through all economic cycles.
