A leading City investment analyst has poured cold water on the prospects of Rightmove in the short to medium term after its shares dropped 8% at one point yesterday afternoon following its decision to extend its Coronavirus fees discount period until the end of September.
Hargreaves Lansdown, which gained considerable notoriety last year following its role in the downfall of Neil Woodford’s Investment Management Fund, says it expects the portal to lose more agent customers as the economic slowdown caused by the pandemic begins to bite harder.
Rightmove revealed yesterday that it had already lost 3.8% of its advertisers including 620 agents and 135 developers since the start of the year.
Worse to come
“As the UK is weaned off furlough schemes towards the end of 2020, we expect the worst is yet to come. The result could be more of Rightmove’s customers going out of business,” the report says.
“Overall, Rightmove’s dominant market position should stand it in good stead once conditions return to normal.
“But normal is looking increasingly far away which is going to hit earnings this year at least.
“For now, the dividend is suspended. The full extent of the damage will depend on how long the disruption lasts, and how quickly the economy recovers.”
But there is good news for agents in the Hargreaves Lansdown report. It says that the tough economic conditions means such an environment “doesn’t bode well for price rises”, suggesting the portal will have little option but to freeze or drop its fees as the pandemic’s affect on agent profits and turnover continues to create problems through this year and into 2021.