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Rightmove shares tumbled as much as 25 per cent on Friday after the UK property listings site warned that profit growth would slow as it increased investment in artificial intelligence.
The FTSE 100 group forecast underlying operating profit growth of 3 to 5 per cent next year, down from 4 to 9 per cent for 2024 and 2025.
Rightmove said the weaker profit growth “reflected . . . increased investment”, including £18mn next year.
Its shares fell 24 per cent after the market opened in London, before paring losses. By late morning they were down more than 13 per cent at £5.67.
Johan Svanstrom, Rightmove’s chief executive, said AI was “becoming absolutely central to how we run our business and plan for the future”, and that the company was “investing to accelerate our capabilities”.
In a presentation on Friday to analysts and investors, the company said it would expand its AI investments in three areas: for customers, its back-office operations and research and development.
For customers, executives said they aimed to update the search function with features such as conversational searches and an AI mortgage assistant. It also highlighted a new AI tool it had already launched that allows users to redecorate a room virtually to see what it looks like.
The company said it is working on 27 AI projects and other smaller developments but that they are at an “early stage”. It also wants to create AI tools that will help the estate agents that use its site to work more efficiently.
“We are convinced now is the right time to invest a bit of our very strong cash flow into this over the next few years,” Svanstrom said in the presentation. “We do it for future proofing and for value generation.”
Rightmove also plans to hire product engineering and AI specialists. In the longer term, it forecast that the investment would drive “double-digit” underlying profit growth.
“Rightmove profits have, in the main, grown each year, but these new proposals may be a case of two steps back to move three steps forward,” said RBC analyst Anthony Codling, who said he believes the market has overreacted to the company’s plans.
“The fundamentals of the business haven’t changed,” he said. “Estate agents and housebuilders still have to use Rightmove.”
He added that Rightmove was “a bit behind the curve” on technology investment because of their dominance of the market. “Eventually that will catch them out and they’re trying to guard against that.”
The London-listed group said on Friday it had “conviction” in its strategic growth areas, which include commercial property, but that it would meet its revenue targets for them later than 2028. The company reiterated its guidance for 2025.