What Happened?
Shares of digital media conglomerate IAC (NASDAQGS:IAC) fell 13.5% in the afternoon session after the company reported second-quarter revenue that fell short of analyst expectations, overshadowing a significant profit. The media and internet company’s revenue landed at $586.9 million, a 7% drop from the year-ago period. This decline stemmed from weakness in several key areas. Although IAC recorded a profit of $2.57 per share, a stark reversal from last year's loss, this figure included a large unrealized gain from its investment in MGM Resorts International. Investors appeared to focus on the operational weakness rather than the investment-driven profit.
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What Is The Market Telling Us
IAC’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. But moves this big are rare even for IAC and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 4 days ago when the stock dropped 3.2% on the news that a surprisingly weak U.S. jobs report was released, fueling concerns about a slowing economy. The U.S. economy added only 73,000 jobs, falling significantly short of economists' expectations, while figures for May and June were revised down, erasing 258,000 previously reported jobs. The professional and business services industry itself shed 14,000 jobs. This data points to a cooling labor market, fueling concerns of a slowing economy. A weaker economic outlook often leads to reduced corporate spending on key services like IT consulting and professional staffing, which directly impacts the sector's revenue and growth prospects. The report immediately increased investor expectations of an interest rate cut by the Federal Reserve.
IAC is down 20.1% since the beginning of the year, and at $34.04 per share, it is trading 38.2% below its 52-week high of $55.10 from November 2024. Investors who bought $1,000 worth of IAC’s shares 5 years ago would now be looking at an investment worth $254.05.
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