Rightmove PLC's (LSE:RMV) pledge to spend £60 million over three years on artificial intelligence and platform development has divided opinion, with the shares plummeting 27% in early trading.
Several analysts applauded the company’s ambition despite warning of short-term profit pressure.
New financial guidance issued by the FTSE 100 company for 2026 includes revenue growth of 8-10% with underlying operating profit growth of 3-5%, below the consensus at 9.9% reflecting planned increased AI and other tech investments.
Broker Peel Hunt cut earnings per share forecasts up to 9% for 2026 and 2027, as margin estimates were cut from 70% to 67% and 65% respectively for the next two years.
But analyst Jessica Pok said: "We believe today’s investment announcement positions the business to stay ahead of the curve by enhancing its proposition and unlocking future monetisation potential."
Rightmove said it is planning to apply AI across three key areas: enhancing the consumer proposition, improving internal operational efficiency, and increasing R&D to unlock new growth opportunities.
Panmure Liberum’s Sean Kealy estimated a 7–10% cut to earnings expectations as there was "not a huge reduction" on profit margins, but management also planned to capitalise some costs too.
He said it was "worth noting that much of the investment they announced in 2023 will simply have alleviated some of the upward pressure on wages" reported by the company in 2022 and 2023.
Jefferies’ Giles Thorne described it as a "complex" update for the shares.
"The tone of today's update is Rightmove seizing the moment to sculpt its role in the AI-era of property advertising in the UK. For the market, however, the focus will instead be on the incoming pressure on FY26 EBIT expectations and how / why the business can reverse the negative operating leverage from FY27 onwards.
"And in the back of everyone's mind will be whether the board's decision to reject the REA approach at close to 800p this time last year was the right one."
UBS analyst Jo Barnet-Lamb moved the stock from 'buy' to 'under review', saying the "strategic pivot poses important questions that the market will not yet have answers to".
Despite the sharp market reaction, analysts agree the logic of the investment is sound.
As Pok put it, the spending “should enhance Rightmove’s platform, deepen its network effects and support future double-digit growth”, but some less patient shareholders clearly did not want to wait for such a pay-off.