Wall Street rises as materials and crypto stocks offset continued bond sell-off
Investing.com -- Rightmove plc shares sank more than 25% on Friday after the property portal forecast slower profit growth for 2026, citing increased investment in artificial intelligence.
The U.K.-based property portal projected revenue growth of 8-10% and underlying operating profit growth of 3-5% next year.
RBC said the new guidance implies a 4-6% downgrade to consensus operating profit, reflecting incremental profit and loss investment of £12 million and an additional £6 million in capitalized spending to support future technology and AI development. The £12 million allocation represents about 4% of EBIT growth.
RBC in a note said that Rightmove’s management is seeking “to take Rightmove to a new level, to harness AI in the way that the founders harnessed the internet.”
The analysts described the company’s strategy as an effort “to accelerate execution through AI” by investing more rapidly in platform enhancements.
Rightmove’s planned upgrades include an AI-enhanced front end to move its app “beyond just ‘finding a home’ ” and a rebuilt back-end infrastructure “to make their customers’ lives easier.”
The company is also funding research and development to digitize more of the process of buying and renting homes, which remains largely manual, with the goal of creating additional products for agents and developers.
For the current year, Rightmove reaffirmed its 2025 guidance. The company expects about 9% revenue growth, within its 8-10% range.
Average revenue per advertiser, or ARPA, is projected to grow about 1%, between £95 and £105, compared with consensus estimates of £109.
Adjusted EBIT margin is forecast at 70%, in line with both consensus and RBC estimates, and membership numbers are expected to increase about 1% year over year.
RBC’s analysis indicated that Rightmove’s longer-term plan targets annual revenue growth of 8-10% and operating profit growth of 3-10% between 2026 and 2028.
Based on the midpoint of that range, operating profit would be about 6% below current consensus by 2028, with an implied operating margin of 67.4% compared with 70.5% consensus.
Earnings per share are expected to rise 5-12% a year over the same period, below the 15.8% consensus projection.
By 2030, the company aims for revenue growth of more than 10% a year, underlying profit growth above 12% and EPS growth greater than 15% a year.
RBC said previously stated revenue ambitions for strategic growth areas, first outlined in 2023, are now likely to be achieved later than 2028.
Rightmove’s trading update showed mixed housing market conditions. Sales agreed for 2025 to date were up 4% year over year, while listings remained at 10-year highs, 3% ahead of last year.
National prices were broadly flat as higher supply and budget uncertainty limited price gains. Rental prices were up from a year earlier, but with slower rent growth and demand.
Between July and October, there were 11 enquiries per property, down from 2024 but above the pre-pandemic average of 6-7.
