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FTSE 100 heavyweight Rightmove (LSE:RMV) is the worst-performing stock in the index over the past six months. Yet with the share price now trading at 52-week lows and turnaround plans underway, there’s chatter that it could be one of the best stocks to buy now, or at least to consider.
Here’s what I discovered after digging deeper!
Reasons for the fall
The bulk of the fall came in November, when Rightmove warned that underlying operating profit growth for 2026 will be much slower than previously expected. A part of this is due to “the rapid and scaling developments in AI technology”.
Ramping up AI spend is costly and the news spooked investors, leading to a sharp share price drop on the day. The company plans to spend £60m on AI and platform development over the next few years. It’s not a short-term project, but rather one that could see reduced profit margins for some time.
Another factor has been the slow UK property market. Due to interest rates staying higher for longer, as well as tax pressures from the government, it hasn’t exactly been the best time to buy property.
As the leading property marketplace, this naturally has dampened sentiment around the Rightmove share price in recent months. Over a broader one-year time horizon, the stock’s down 21%.
Why it could be attractive
I think the fall, based on AI and tech spending pledges, has been completely overdone and doesn’t value the company fairly. Although investors initially reacted negatively, the investments are designed to strengthen its competitive position and unlock future revenue streams. It’s a classic case of having less jam today to provide more jam tomorrow.
The company’s rolling out AI-powered search, valuation tools, and enhanced user experiences. It’s not doing this for fun, it’s to help with attracting more users and increasing engagement. In turn, this should lead to more clients wanting to pay for advertising, boosting revenue.
I also think the property market could do well in 2026. The concern around the Autumn Budget appears to have been somewhat of an overreaction. If we get a situation where interest rates continue to fall, and the economy gets a boost from this, I’d expect people to have enough confidence to look to move (either renting or buying).
Weighing it all up
As said, Rightmove dominates the UK property portal market. It’s true that in the past, the growth stock’s valuation has been quite high. Yet with this reset, the price-to-earnings ratio’s now almost in line with the FTSE 100 average. Therefore, I do think it’s one of the best stocks for investors to consider buying, as the recent fall has removed the premium valuation.
If it can execute well on the AI buildout and show quickly that it can yield results from higher engagement, I think the share price could do very well this year.
