Investors take fright at Rightmove’s AI spending push
Rightmove’s plans to spend heavily on artificial intelligence at the expense of profit growth sent shares in the property listings website down by more than a quarter, wiping more than £1 billion off its market value.
The company is betting that putting AI “at the centre” of everything it does will strengthen it in the long run and cement its position as the UK’s dominant property website.
Yet investors did not immediately buy the vision and the company’s stock plunged 28 per cent when the market opened yesterday, rebounding to close 12.5 per cent lower, giving it a market capitalisation of £4.3 billion.
The reaction demonstrates concern about the hype surrounding AI, as billions of dollars are poured into the technology and investors try to work out its real value. A recent study by MIT found the 95 per cent of generative AI projects implemented by companies do not produce any returns.
Next year, Rightmove said it will spend an extra £12 million on its profit and loss account, plus another £6 million on capital projects to boost its technology and AI plans. That £12 million is about 4 per cent of expected profits and it means that revenue growth targets will be hit later than expected.
Johan Svanstrom, the chief executive, said that AI will be “absolutely central” to how Rightmove operates and detailed a multi-year collaboration with Google Cloud to enhance its data, AI and platform capabilities. This will be in areas such as AI-powered search, digital property valuations and AI-enhanced operations.
Despite the investment, Rightmove reaffirmed its 2025 guidance of about 9 per cent revenue growth. However, it said that in 2026 underlying operating profit growth is expected to slow to between 3 per cent and 5 per cent as the increased spending kicks in.
Rightmove was founded in 2000 and has since become the UK’s dominant property portal. The majority of estate agents in Britain advertise on the platform, and more than 80 per cent of the time Britons spend looking for homes online is on Rightmove. However, challengers are getting stronger. OnThe- Market is growing following its takeover by CoStar Group two years ago.
Analysts were also dubious about the spending. Anthony Codling at RBC Capital Markets said: “The pressure will be on management to explain why now is the time to take a step back and shake up the money tree, how they will get the balance right between pruning to promote growth versus cutting too far.”
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