A financial column in The Times has advised investors to avoid Rightmove.
Simon Duke, in yesterday’s Tempus column, said that Rightmove is one of the world’s most successful enterprises.
However, Duke said it has managed to “milk” estate agents, and asks whether their patience might be about to snap.
Duke says that Rightmove has a market capitalisation of £5.5bn, an average of over £10m for each of its 538 employees – Apple doesn’t come close, he says.
Rightmove enjoys “outsized profit margins” and is among the most highly rated companies on the stock market.
It has established dominance in its field, benefits from a strong network effect, and as an incumbent, has not had to invest large sums to maintain its lead.
Despite Brexit paralysis, last year Rightmove raised its revenues by 8% to £289m with pre-tax profits rising to £214m.
But, Duke says, “scratch beneath the surface, though, and a different picture emerges”.
He adds: “The slump in advertisers on the platform begs an even more fundamental question. For years, Rightmove has managed to milk clients for steadily greater sums every month, but not by enough to cause a revolt.
“With the average monthly bill for an estate agent’s branch now approaching £1,100, might their patience be about to snap?”
Duke quotes a “blistering” research note from Jefferies in December, which argued that “the game could be up for Rightmove if agents take collective action to free themselves from the portal’s ‘psychological chokehold’.
“That will be easier said than done.
“Nevertheless, competition is increasing and agents have other options to list their properties.
“At the present level, its shares are trading at 30 times this year’s estimated earnings. Other portals offer more attractive valuations and are growing more rapidly.”
In his ‘avoid’ advice, Duke says Rightmove will struggle to raise prices by enough to merit valuation, and “other portals are cheaper and will grow more quickly”.
The only points missing in the article are, how much Agents dislike Rightmove, the shockingly poor customer service they offer and most of all ……the sheer level of arrogance which Rightmove displays towards Agents.
Rightmove must surely be ranked No1 “Most Loathed Service Provider” by UK Agents.
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i couldn’t have put it better without swearing
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I implore every agent to re-tweet this so it appears on their own website, and engage with prospective vendors on valuations, that 1000 agents have already left RM and are moving their stock onto other portals. Plus as agents we must promote social media as being a very productive way of displaying properties and engaging with generation Z, think Instagram. I did it last night on a valuation, and the customer didn’t realise how much we paid for this service. Another customer said you are not independent you are part of RM, his thinking was that we are all part of this large conglomerate like a sub agent in insurance. That is the problem folks, the general public’s perception is that RM are an agent, as well being on line similar to PB. We have all lost our individual identity, having sold our soul out to RM and being held ransom to them. This is the year to rebel and take collective action. The cat is out of the bag, in terms of this journalistic article. Well done to who ever managed to feed this to the Times. I write this after Flybe goes bust, because it was cheap, and air fares have been a race to the bottom for 20 years, along with Air Passenger Tax, sometimes being more than the airfare which the government received, than the airline got in profit. Sounds familiar to EA’s paying RM.
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Great comment!
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Just leave them for goodness sake. Moaning does nothing.
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At a valuation of 30 X earnings and the underlying issues with their customer base, the cliff edge is moving ever closer. New technology and a philosophy of far less greed will eventually free agents of this racket……
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It has established dominance in its field.
Agents made it dominant. Agents can also make it fall. RM has never taken care of its agent customer base … just milked it for all its worth and the balloon has been losing air for some time.
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