Rightmove’s share price nosedived on Friday following the portal’s latest trading update in which it said the portal is pivoting to a multi-million bout of AI development that would impact profits.

The property portal’s shares dropped dramatically from £6.60p to £5 during initially trading before recovering to £5.74, or a drop of just under 14%. The share price has remained at this level at the start of trading today.

The company has not commented on this dramatic reduction, which represents one of its biggest market cap reductions since the pandemic.

But financial market analysts have pinned part of the reduction on an overall stock market weakening following months of strong rises and some investor jitters over the real potential of AI.

“Investing for future growth is not a bad thing but the scale of the market’s negative reaction implies real scepticism about its decision to put so much money into AI,” says Russ Mould, investment director at AJ Bell.

The portal’s decision to take a gamble on AI technology to drive it future growth is also the first time Rightmove has deviated from its core business model in a meaningful way.

Golden goose

Analysts at investment giant Citi said its trading update on Friday morning “infers low to middle single digit downgrades to consensus underlying operating profit” or, more plainly, Rightmove’s new AI plans have the potential to kill the goose that lays the golden eggs.

And Anthony Codling from RBC Capital Markets agrees, saying: “Rightmove profits have, in the main, grown each year, but these new proposals may be a case of two steps back to move three steps forward”.

Mal McCallion, founder of rival MyPorta, says: “This is a big moment for the property industry – Rightmove’s presumed ‘forever’ growth might be starting to come to an end”.