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The WPP (LSE:WPP) share price has proven to be what investors call a ‘falling knife’. At the start of 2025, it had already slumped 30% since early 2022. Investors who thought it safe to invest at 827p were rewarded with a further 35% fall by April.
Surely, this was the bottom at 500p, right? Wrong. It then lost another 30% between April and the start of October!
Investors buying the stock at the beginning of this month might have thought they were finally getting in near the bottom at just 370p. But the WPP share price nosedived another 16.4% today (30 October) to just 301p.
For context, the ad group’s market cap was £24bn in 2017. Now it’s just £3.3bn, which could soon see it relegated to the FTSE 250. It has been in the FTSE 100 since 1998.
Another profit warning
WPP used to be the world’s biggest advertising group. Its agencies have long handled work for some of the most recognisable brands around, including Coca-Cola and Dove (Unilever). These long-standing client relationships are undoubtedly a key strength.
In recent years, however, the company’s revenue and profits have been under massive pressure. Some clients have been leaving, while AI is disrupting previously lucrative parts of the advertising world (like creative).
New CEO Cindy Rose came in from Microsoft in September to steady the ship and get things back on an even keel. Unfortunately, her first update to investors today wasn’t great. WPP’s Q3 revenue was down 8.4% to £3.26bn, while like-for-like (LFL) revenue fell 3.5%.
Revenue less pass-through costs (a key metric) was 11.1% lower (or 5.9% on a LFL basis). Year-to-date revenue of £9.9bn was down 8%.
And for the full year, WPP expects revenue to fall 5.5% to 6% (previously 3% to 5%). The headline operating profit margin is set to be around 13% (just below its previously guided range).
Obviously these are worrying numbers, and to be fair Rose didn’t mince her words, calling them “unacceptable“. But she said the team were taking measures to address this performance. “We have strong foundations and the ingredients needed to succeed”. she added.
A turnaround stock?
Below is another (longer) extract from the Q3 trading update, which I think is worth mentioning.
To deliver performance improvements, we will position our offering to be much simpler, more integrated, powered by data and AI, efficiently priced and designed to deliver growth and business outcomes for our clients. We will significantly improve our execution, strengthening our go-to-market and dramatically simplifying how we organise ourselves internally, as well as building a high-performance team culture.
This language of “dramatically simplifying” things and building a “high-performance team culture” reminds me a little of Rolls-Royce when CEO Tufan Erginbilgiç came in at a time of crisis. He called the engineering group a “burning platform” and said the culture needed to change drastically.
And we all know what happened to Rolls-Royce stock after that!
Might WPP turn out to be another Rolls-Royce? I’m not convinced. One immediate thing Erginbilgiç did was successfully renegotiate contracts to improve margins (a display of pricing power).
Looking at the wording above, though, pricing its offering more “efficiently” for the age of AI sounds like something else. There’s too much uncertainty for me to invest. I’ll look for opportunities elsewhere.
