AI hype fails to paper over Rightmove's cracks
07/11/2025 11:33
The author is a Reuters Breakingviews columnist. The opinions expressed are her own. Refiles to add dropped word in paragraph two. By Yawen Chen LONDON, Nov 7 (Reuters Breakingviews) - Britain’s biggest property portal is trying to redefine its place in the AI era. Shares in Rightmove RMV.L slumped as much as 28% on Friday after the $6 billion company unveiled new financial targets and a modest push into artificial intelligence. The AI opportunity, however, is only papering over what look like deeper cracks. AI could be a big deal for Rightmove. Chief Executive Johan Svanstrom plans to lift investment by about 18 million pounds in 2026 to fund tools such as digital home valuations, a “Style with AI” design feature, and smarter search tags for traits like “exposed brick” or “river views.” It's a relatively small outlay for a company with a roughly 70% operating margin this year. The hope is that it could open up new opportunities beyond Rightmove’s core business, where estate agents and developers pay subscription fees to advertise homes - for instance, by helping punters find and better price their future homes. Still, if Rightmove truly believes AI will reshape property search, shareholders may wonder why it isn’t spending more, and predicting higher growth and returns. The group on Friday said it expects revenue growth of 8% to 10% between 2026 and 2028, slightly below consensus of 10%, according to analysts polled by Visible Alpha. It also pushed back its "Strategic Growth Area" targets covering rentals, new homes, overseas and commercial listings — now aiming to meet them later than the original 2028 goal. The company’s new ambition for 2030 onwards of annual revenue growth above 10% is broadly what it had been previously targeting for the years up until 2028. In short, even with the AI boon, Rightmove may end up performing worse than investors and analysts had expected. The backdrop doesn’t help. Housing sales are stagnating due to weak consumer confidence, still high interest rates, and fears over Chancellor Rachel Reeves’ imminent tax-raising budget. Knight Frank now expects UK house prices to rise just 1% this year from 3.5% in its September forecast. The deeper concern is that Rightmove faces not just rivals like OnTheMarket, but also new AI-driven search tools such as ChatGPT, which may help punters find properties, resulting in them spending less time eyeballing Rightmove. ChatGPT still only accounts for less than 0.5% of the traffic that comes to Rightmove's website, but is spending hundreds of billions of dollars to power its artificial intelligence models. The disappointing guidance may also revive questions about management’s decision to reject Rupert Murdoch-backed REA Group’s REA.AX 2024 takeover approach. Rightmove shares are now languishing some 27% below the Australian company's offer of 780 pence. If Murdoch were inclined to have another go, Rightmove's defences would have shakier foundations. Follow Yawen Chen on Bluesky and LinkedIn. CONTEXT NEWS Britain's biggest property portal Rightmove said in a trading update on November 7 that its revenue in 2026 was expected to increase between 8% and 10%. For 2026, Rightmove expects to invest about 18 million pounds ($24.2 million) in various initiatives, especially in artificial intelligence, which will restrict underlying operating profit growth to 3% to 5%, slower than the 9% growth at the end of the first half of 2025. By 2030, Rightmove is targeting annual revenue growth of over 10%, underlying operating profit growth of more than 12%, and earnings per share growth of more than 15%. Rightmove shares plunged as much as 28% in morning trading sessions on November 7. It was down 10% at 587 pence at 1020 GMT. Rightmove’s share price has plunged in recent months https://www.reuters.com/graphics/BRV-BRV/akpejqqgkvr/chart.png (Editing by Neil Unmack; Production by Shrabani Chakraborty) ((For previous columns by the author, Reuters customers can click on CHEN/yawen.chen@thomsonreuters.com))