IAC Still Loves MGM, But Mulled Other Gaming Deals

Posted on: May 22, 2025, 02:13h. 

Last updated on: May 22, 2025, 02:13h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Diller’s company owns 23% of MGM shares
  • IAC has mulled other gaming investments, says analyst

Barry Diller’s IAC/InterActiveCorp (NASDAQ: IAC) continues viewing its 23% stake in MGM Resorts International (NYSE: MGM) as a “forever asset,” but the conglomerate has mulled other gaming deals.

diller MGM
IAC Chairman Barry Diller. His company remains bullish on MGM, but has examined other gaming opportunities. (Image: Bloomberg)

That’s according to a note published earlier today by Truist Securities analyst Youssef Squali who recently met with CFO/COO Christopher Halpin and Vice President Mark Schneider in New York. The analyst noted IAC remains active with its investment in the casino giant with Diller and former IAC CEO Joey Levin being members of MGM’s board of directors, but that hasn’t stopped IAC from assessing other deals in the gaming industry.

Aside from advising MGM, IAC has explored deals itself within the real money gaming industry,” wrote Squali. “While it will run mergers and acquisitions opportunities by MGM, there is no formal exclusivity agreement between MGM and IAC. We note management does hold valuable gaming licenses, a sizable barrier to entry for new entrants.”

The analyst didn’t mention specific gaming companies at which IAC has examined possible investments, but IAC has a long history of taking stakes in and turning around internet-based businesses, so it’s possible iGaming and/or online sports betting have been points of emphasis for the firm when evaluating potential new gaming investments.

IAC Still Views MGM as Undervalued

IAC initially took a 12% stake in MGM, then valued at $1 billion, in August 2020, but through a combination of additions and the gaming company shrinking its float via buybacks, the conglomerate’s stake has nearly doubled since then.

While Diller and Levin hold board seats at MGM, IAC has largely thread a needle between being an activist and passive investor in the Bellagio operator. IAC has been active in helping BetMGM manage costs and expenses — moves that have paid dividends because the online gaming company will be positive on the basis of earnings before, interest, taxes, depreciation, and amortization (EBITDA) for the entirety of 2025.

On the other hand, IAC hasn’t publicly called on MGM to engage in large, transformative transactions or to shakeup its leadership team, which are often hallmarks of traditional activist investors. Diller’s company, however, is of the mind that MGM shares remain undervalued.

“While IAC’s cost basis for MGM stock is $19 and the shares are trading over $31, management believes MGM continues to be grossly undervalued, trading at 3.5x EBITDA (netting out betMGM and MGM China),” adds Squali.

IAC Credible Alternative to Owning MGM

IAC can be viewed as a “synthetic” way of owning MGM stock and Squali acknowledges investors frequently ask why it makes more sense to own the former instead of directly owning shares of the gaming company.

“Here, we believe that ownership of IAC provides investors with an attractive cost basis for playing MGM (at $19/share) in addition to providing investors upside from the remainder of the portfolio along with shareholder friendly capital allocation,” concludes the analyst.

It’s also possible IAC will increase its MGM position over the near-term. In remarks made earlier this year, Diller said that is on the table.