Quick Value #306 - Ziff Davis (ZD)
This "perceived" AI loser is trading at 2.4x EBITDA and actively shopping parts of the business; deal announcements expected soon
Today’s post:
Maybe a most hated stock in the market? One of the cheapest in Russell 3000
Shares are trading at 2.4x EBITDA, 3.6x FCF with 0.4x leverage
No 2026 guidance sent shares down another 13% in Feb ‘26
Inbound interest to acquire parts of the business ongoing
For new subscribers — these write-ups are meant to be a “jumping off point” for the idea generation process (i.e. a surface level review). Each write-up includes: 1) company background; 2) why the idea is interesting; and 3) fair value estimate.
Check out past write-ups here and my home base page here.
Recent write-ups include:
02/09/26 — Wholesale changes in the VDL portfolio ($)
02/02/26 — A look at Allison Transmission’s recent acquisition
01/26/26 — Multi-pronged special sit Teleflex ($)
01/19/26 — A look at the KBR upcoming spin-off
01/12/26 — Supremex is super cheap and inflecting ($)
01/06/26 — Shares of Cinemark look beaten down
Quick Value
Ziff Davis (ZD)
Ticker: ZD
Price: $27
Shares: 37.7m
Market cap: $1bn
Valuation: 2.4x EBITDA (trailing)
Theme: Beaten downThe VDL timeline as it relates to Ziff Davis:
I first wrote about Ziff in Feb 2023 when it traded at $93. It wasn’t all that interesting at 9x EBITDA as the business was slowing post-COVID.
Fast forward to March 2025 and at $40 it was getting more attractive.
Finally, in Apr 2025, I took the plunge and bought the stock at $33.
Now, it’s Feb 2026 and shares fell to $27 after reporting FY25 results.
Readers/followers are demanding some answers, so let’s take a look…
Background
Ask any boomer-aged IT person about Ziff Davis and you’ll get a hearty laugh and a “I haven’t heard that name in forever!” There’s some truth here, it’s a web 1.0 digital media business built on old school publishing principles.
What do they actually do?
There are 2 primary revenue streams: advertising (57% of FY25 revenue) and subscription/licensing (43%). It’s a conglomerate with 5 segments:
Technology & Shopping — Operate websites like PCMag, CNET and RetailMeNot which generate affiliate commissions (i.e. when a consumer is searching the web for “best laptops” and stumbles on a PCMag article, they click through and buy something from an affiliate website and ZD gets a cut). There are banner ads and other revenue streams, but it’s highly driven by web traffic. This segment is most “at risk” from changes in AI web search tendencies.
Gaming & Entertainment — IGN is a gaming news, reviews, and walkthroughs website with revenue coming mainly from display ads. There’s a healthy mix of paying subscribers at an average ~$120 per year too. This segment seems moderately insulated from AI search risks.
Health & Wellness — A handful of content and directory websites in this segment. Example: they operate a directory of “top doctors” for consumers looking in their area. Nearly 85% of revenue is advertising driven with small ticket subscriptions rounding out the rest.
Connectivity — Ookla is the main component here and likely the “crown jewel” within ZD. Since 2006, they’ve completed 66bn network speed tests and have 16k testing servers around the world. ISPs like Comcast, AT&T, etc. pay to license this data for their own network response efforts. There are ~25,000 customers paying an average ~$8,300 per year to access Ookla’s data.
Cybersecurity & Martech — 3 main pieces in here: IPVanish is a VPN service, VIPRE is a consumer/business cybersecurity subscription service, and Moz is a subscription service for small business SEO tools. Total subscribers in this segment are >1.2m paying ~$220 per year on average. AI risks seems low/medium in this segment.
Now, Ziff Davis only moved to this level of disclosure in the past year, so we have a limited view of segment financial history.
