Rightmove risks becoming an “archaeological relic” as artificial intelligence threatens to overturn the traditional property portal model, a leading London estate agent has warned.
Trevor Abrahmsohn (main picture, inset), CEO of Glentree International, made the comments after US activist investor Sachem Head Capital Management built a stake of around 6% in Rightmove following a sharp fall in the portal’s share price.
The investment has intensified speculation over Rightmove’s future, two years after Australian property group REA abandoned a £6.2bn attempt to acquire the business.
Rightmove shares have fallen by around a third over the past year amid concerns about the potential impact of AI on property search, leaving the company valued at approximately £3.6bn.
AI THREAT
Abrahmsohn says: “Sachem Head Capital Management, run by Scott Ferguson, a former partner at Ackman’s Pershing Square, should know what they are doing when they ambushed Rightmove’s shares at a low price, now holding a strategic stake of 6% in the company. It is perfectly true that Rightmove has an almost ‘giddyingly’ high profit margin of in excess of 70%.
“Never-the-less, the AI colossus is strategically perched, waiting and watching to engulf Rightmove and its brethren in the digital portal market, and will inevitably turn it into an archaeological relic.
“It’s only a matter of time before this happens and perhaps the ‘fleet-footed’ Sachem Head Capital Management, having made a ‘bob or two’, will be high ‘tailing it out of town’ having dumped the shares at a much higher price, and making off with another tidy parcel of bounty.
“The Residential Property Industry knows, only too well, that the digital portal model is on its last legs and will undoubtedly follow the Kodak and Polaroid examples of obsolete entities of their time.”
RIGHTMOVE FIGHTS BACK
The warning comes as Rightmove Chief Executive Officer Johan Svanstrom sets out plans to use technology and AI to expand the portal’s role beyond property listings.
Svanstrom told The Times at the weekend that Rightmove is investing around £60m in technology as it develops AI tools for estate agents and seeks to play a greater role in the home-moving process.
His ambition includes helping reduce the period between an offer being accepted and completion from around 150 days to 40 days through greater use of upfront property information and digital data.
Sachem Head, meanwhile, is reported to believe the market has overreacted to the threat posed by AI and that Rightmove is undervalued.
