What Happened?
Shares of digital media conglomerate IAC (NASDAQGS:IAC) fell 3.1% in the afternoon session after Oppenheimer downgraded the company's stock to 'Perform' from 'Outperform,' citing concerns about its valuation.
The investment firm noted that the discount in IAC's valuation was much smaller than its five-year average. According to Oppenheimer's analysis, IAC's stock had also been trading as a proxy for MGM Resorts, with a strong correlation between the two. The firm also expressed concern about IAC's leadership being unwilling to sell or use the MGM stake differently. The downgrade also considered the performance of IAC's portfolio companies, mentioning that Care.com and Turo were still in turnaround phases. The stock's fall also came as the wider tech sector experienced downward pressure.
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What Is The Market Telling Us
IAC’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 24 days ago when the stock gained 4.1% on the news that comments from a key Federal Reserve official hinted at a potential interest rate cut in December.
John Williams, president of the Federal Reserve Bank of New York, signaled he was open to lowering the fed funds rate—the key interest rate that banks charge each other for overnight loans—to support the job market. Speaking at an event, Williams stated that he sees “room for a further adjustment” for interest rates, which immediately shifted market expectations. Following his remarks, the perceived likelihood of an interest rate cut at the Federal Reserve's December meeting flipped from unlikely to more likely than not. The prospect of lower borrowing costs sent a wave of optimism through the markets, leading to a rally in major indices like the S&P 500, Dow Jones Industrial Average, and the Nasdaq Composite.
IAC is down 11.7% since the beginning of the year, and at $37.63 per share, it is trading 24.7% below its 52-week high of $50 from March 2025. Investors who bought $1,000 worth of IAC’s shares 5 years ago would now be looking at an investment worth $242.28.
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