IAC/InterActiveCorp: Dating and Dollars

07/09/2015 7:00 am EST


Michael Cintolo

Vice President of Investments and Chief Analyst, Cabot Heritage Corporation

After dating for a few years, this featured recommendation is single again and Wall Street’s most eligible bachelors are flocking to its side, explains Mike Cintolo, growth stock expert and editor of Cabot Top Ten Trader.

IAC/InterActive (IACI) is spinning off its Match Group online dating empire—which includes high-profile dating sites and apps Match.com, OKCupid, and Tinder, to name a few—into an IPO.

IAC plans to sell as much as 20% of its common stock later this year, which could fetch the company as much as $1.2 billion or more than a third of its total 2014 sales.

IAC plans to focus on its booming search businesses, which include recognizable brands such as About.com, Ask.com, and Investopedia.

It’s the latest in a series of spin-offs for IAC/ InterActive; hoping to stay solvent during the recession, in 2008 the company spun off four entities; HSN, Interval Leisure Group, Ticketmaster, and Tree.com.

That yard sale came on the heels of a 2005 spin-off of the travel Web site Expedia. So IAC has a long history of spin-offs, which should help it fetch the price it’s seeking.

After doubling from 2009 to 2012, the company’s sales have slowed of late, while earnings per share have regressed.

Thus, the timing of the move—and the immediate influx of cash—makes sense and is already succeeding in grabbing investors’ attention.

Technically, IACI has been a volatile stock over the last six weeks, ping-ponging between $78 and $72 since early May. The Match Group spin-off announcement pushed shares above $81 on strong volume.

That momentum has a good shot at continuing as more details about the spin-off emerge. You can grab some shares on this dip, with a stop just below its 50-day moving average.

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