Rightmove's removal from the FTSE 100 index has left a significant dent in the UK property portal's share price, with shares closing at 417.9p on Friday, down 1.35% on the day and a further 2% over the week. This marks a turning point for the company, which has seen its market capitalisation dwindle to approximately £3.1 billion from a peak of around £6.7 billion in 2021. The share price drop is attributed to a combination of factors, including a major £1.5 billion legal claim filed earlier this year and pressure from activist shareholders.
The company's decision to invest heavily in artificial intelligence (AI) and new products has been welcomed by some as a strategic move to bolster its dominant market position. Rightmove currently accounts for over 80% of the time consumers spend on UK property portals, significantly outperforming its rivals. The £60 million investment programme is expected to drive growth, with Rightmove maintaining its guidance for revenue growth of 8% to 10% in 2026 and operating profit growth of between 3% and 5%. However, investors will be closely watching the company's ability to execute this strategy effectively.
The demotion from the FTSE 100 index is likely to have a direct impact on investment funds that track these indices. Funds mirroring the FTSE 100 may look to sell their Rightmove holdings, potentially creating volatility in the short term. Conversely, those tracking the FTSE 250 may see an opportunity to acquire shares, further fuelling market uncertainty.
Rightmove's rejection of four takeover bids from REA Group in 2024, with the highest offer valuing the company at £6.2 billion, has also contributed to its current valuation woes. The share price remains significantly below this implied offer price, highlighting concerns among investors about the company's ability to sustain profitability.
The next market update is expected on 31 July, when Rightmove releases its half-year results, providing further insight into its financial health and future trajectory. Investors will be closely monitoring the company's strategic investments in AI and new products to gauge their effectiveness in bolstering market position while sustaining profitability.