Rightmove’s share price has declined to a five-year low this week, dropping 15% over the past month amid concerns over planned fee increases and investment spending.
The property portal’s shares were valued at £4.37, down approximately 30% from £6.35 in 2021. The stock had reached a peak of over £8 in August last year before declining sharply.
Investment plans impact valuation
The share price fell significantly in November following a trading update that outlined plans to spend £60 million over three years on artificial intelligence and product development, which the company acknowledged would affect profitability.
Rightmove forecast revenue growth of 8-10% and profit growth of 3-5% for the current year during what it described as an “investment phase”. The company stated the additional expenditure would support “double-digit profit growth” in subsequent years.
The portal is scheduled to publish its full-year results later this month.
Agent fee dispute
Independent estate agents warned last week that proposed fee increases of up to 18% this year could force some businesses to close. The portal is also facing a group legal action seeking to recover what claimants describe as “excessive and unfair fees”.
Dan Coatsworth, Head of Markets at AJ Bell, noted the timing of the share decline: “It’s no coincidence that Rightmove’s shares have been in steady decline since announcing last November it would make AI-related investments.”
“A year earlier, any mention of AI would have been cause for celebration. Now it’s a suggestion that Rightmove is having to move with the times, and investors are jittery about companies spending on tech,” Coatsworth said.
He added: “The question people might now ask is whether Rightmove’s AI spending plans are an offensive or defensive move.”
Market outlook
The share price has experienced similar low points in 2022 and 2023, recovering on both occasions. The company’s forthcoming annual results will provide further insight into its financial position and strategic direction as it navigates the investment period and fee structure challenges.