The internet company wants to continue its success story with the IPO of Vimeo. Despite the latest price records, the share is still worth buying. From Sven Heckle
The business model with which IAC / InterActiveCorp (IAC) started in 1995 as Silver King and with a market capitalization of only 250 million US dollars has proven to be very successful. As the majority shareholder, the company gets involved in young, up-and-coming companies and supports them as they grow until the time has come for an independent stock market listing. So far, ten portfolio companies have found their way onto the stock exchange, including the online travel agency Expedia and the credit broker LendingTree. IAC Match Group, the mother of the online dating service Tinder, split off just last summer. Now the next spin-off is imminent.
Shortly before the turn of the year, IAC’s board of directors approved the plans to spin off the subsidiary Vimeo. If the shareholders will give the green light soon, Vimeo is expected to make its stock market debut in the course of the second quarter. Now is the ideal time: More than 1.3 million paying customers make Vimeo the world’s largest ad-free platform for creating, storing, sharing and selling videos. In the B2B area, around 3,500 companies use the offer, including Amazon and Starbucks. The corona pandemic has provided an additional surge in growth. In the third quarter alone, sales rose 44 percent to $ 75.1 million. For the first time, a positive Ebitda of 3.4 million US dollars was posted. In November 2020, Vimeo let a first test balloon rise for a possible market valuation. As part of a financing round, the company sold five percent of the shares to institutional investors for 150 million US dollars. On that basis, Vimeo was valued at $ 2.75 billion, or five to six times its expected revenue for 2022. Various teams of analysts have now even calculated a significantly higher value. According to Bank of America, for example, high-growth software-as-a-service companies are rated around three times higher on average, which is why the analysts believe the stock market aspirant has a market capitalization in the range of ten billion US dollars.
Meanwhile, behind the scenes, the next promising generation in the investment portfolio is maturing, such as Dotdash, an online publishing company, or Care.com. IAC invested 500 million US dollars in the internet marketplace for care and nursing services for families around a year ago.
With a cash position of more than three billion US dollars, the debt-free group had numerous options open to it even before the Vimeo spin-off – from entering into additional investments through to continuing with share buybacks and dividend payments. Investors will probably continue to enjoy the tried and tested business model in the future.
Source: BÖRSE ONLINE