Rightmove shares plummeted by as much as 28 percent on Friday morning, settling around 12 percent lower, after the UK property portal announced a £60 million investment in artificial intelligence that will significantly slow profit growth next year. The FTSE 100 company revealed underlying earnings growth will drop sharply to between three and five percent in 2026, down from the projected eight to 10 percent in 2025.
The company's chief executive Johan Svanstrom defended the strategic shift. "AI is now becoming absolutely central to how we run our business and plan for the future", he said. The CEO emphasized that Rightmove is already working on AI-enabled innovations: "We are investing to accelerate our capabilities, which we are confident will create an even stronger platform and higher-growth business over time. [...]"
Market scepticism
Investors reacted negatively to what analysts called a "jam tomorrow" story. Russ Mould, investment director at AJ Bell, said: "[...] The scale of the market's negative reaction implies real scepticism about Rightmove's decision to put so much money into AI. In the longer term Rightmove suggests this expenditure will drive double-digit underlying profit growth, however, the market is far from convinced [...]" He noted concerns that the company might be "jumping on the bandwagon in dialling up its AI spending."
Anthony Codling from RBC Capital Markets offered historical perspective. "When founded, Rightmove was in the right place at the right time. It harnessed our love of homes with a growing love of the internet [...]", he said. "Previous management teams sat back and enjoyed sitting in the shade of the magic money tree they had the good fortune to tend to. However, times have changed, and the current management want to take Rightmove to a new level, to harness AI in the way that the founders harnessed the internet."
Future outlook
The company projects that by 2030, annual underlying operating profit growth will rise to over 12 percent, with revenues increasing by more than 10 percent.
Analysts at Peel Hunt maintained a buy rating, stating the investment "[...] positions the business to stay ahead of the curve by enhancing its proposition and unlocking future monetisation potential."
The share price dropped to 524p, adding to a year-to-date decline of 15.4 percent.
Note: This article was created with Artificial Intelligence (AI).
