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Rightmove warns investment in AI will hit profits, shares plunge
(Sharecast News) - Shares in Rightmove plunged on Friday, after the property portal warned that increased investment in technology and artificial intelligence would weigh on profits.
The blue chip property portal said AI was becoming "absolutely central" to how the business was run.
It therefore intends to accelerate execution in AI-powered operations, as well as improving the Rightmove app and search capabilities.
Rightmove said its investment plans were intended to support double digit underlying operating profit growth in the longer term.
However, it acknowledged that underlying operating profit growth - which in 2024 and 2025 ranged from 4% to 9% - would likely come in between 3% and 5% in 2026, as a result of the increased investment.
Revenue growth in 2026 was forecast to come in between 8% and 10%, unchanged on 2025's forecast.
As at 0900 GMT, the stock had slumped 17% at 544.34p, having initially lost as much as 22% when trading started.
Johan Svanstrom, chief executive, said: "AI is now becoming absolutely central to how we run our business and plan for the future.
"We are already working on a wide range of exciting AI-enabled innovations for the benefit of our partners and consumers, and see vast potential utilising out leading reach and connected data.
"We are investing to accelerate our capabilities, which we are confident will create an even stronger platform and higher growth business over time."
Guidance for 2025 was unchanged, including around 1% growth in membership and a 70% underlying operating margin.
Jessica Pok, analyst at Peel Hunt, said: "Despite pre-Budget noise around the housing market, Rightmove is set to deliver another year of stable growth in 2025. We believe today's announcement positions the business to stay ahead of the curve, by enhancing its proposition and unlocking future monetisation."
The broker cut its underlying operating margin expectations in response, down from 70% in 2026 and 2027 to 67% and 65% respectively. But it maintained its 'buy' rating on the stock.
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