Rightmove Shareholders Advised to Sell before Costar Purchases Rival Portal

November 8, 2023
Share this Post: 

Investment bank Citigroup has advised shareholders to sell their stock in the portal before CoStar completes the acquisition of OnTheMarket.

Rightmove shares have consistently increased in value over time. But now, Costar's imminent entry into the UK market marks a watershed moment for the UK market leader—which has suffered from a share price drop of more than 15% since news of the Costar/OnTheMarket deal broke.

With Costar set to invest £46.5M ($57.5M) into onTheMarket's marketing budget—on top of the initial $100M buyout—it appears as though Rightmove shares have gone from a safe bet to a ticking time bomb in a matter of weeks.

A research report published last week by Citi elaborated that "Facing well capitalized CoStar in commercial and residential changes the predictability of Rightmove's earnings."

Citi has forecasted that a worst-case scenario for Rightmove could see share prices drop by up to 30%, while a positive outcome could see increases of up to 20%.

Referring to previous challenges to Rightmove's dominant position, Citi suggested that "the firepower and ambition of CoStar means it could be trickier this time."

Costar CEO Andy Florance likened Rightmove to the Inland Revenue Service—a monopolizing presence in the market—when he announced Costar's transatlantic expansion plan. He has repeatedly questioned how Rightmove is able to operate at 72% margin without consequence:

"Public companies don't operate a 72% margin. To operate 72% margin is to say that there's no way any company could ever compete ever in that space."

In fairness to him, Florance has very quickly put his money where his mouth is, and now Rightmove shareholders are set to feel the stinging taste of defeat for a very long time.

Sleepless nights? Perhaps not, but when an investment bank urges you to sell your shares before things take a turn for the worse, it may be worth a listen.

November 8, 2023
Harvey is an experienced property journalist and copywriter. He has written about the property industry since 2015, starting at The Property Franchise Group in the UK, before moving to Spain to work for Spotahome. He has blogged for the private rented sector, ghostwritten for UK property experts and written case studies for franchise owners around the UK. Harvey joined Online Marketplaces as a News Editor in 2022.

Subscribe to our mailing list to get the famous, free Friday newsletter!

News and analysis to help build better online marketplace businesses, in your inbox, every Friday

Related News

Buyrentkenya Nairobi Skyline
BuyRentKenya Partners with Insurance Specialist mTek-Services

BuyRentKenya, a market-leading portal in Kenya, has unveiled a strategic collaboration with mTek-Services, an insurtech firm specializing in digital online...

Read More
Untitled Design 14
Yandex Divests Russian Assets for $5.2 Billion

Yandex N.V., the Dutch parent company of the Yandex group, has announced a definitive agreement to divest all of its...

Read More
Untitled Design 12
Significant Adevinta Shareholder Yet to Approve $14 Billion Offer

Permira and Blackstone's protracted $14 billion takeover of Norway-based marketplace giant Adevinta continues to stutter with a significant shareholder yet...

Read More
Untitled Design 1
What Does the Future of Real Estate Search Look Like?

The Property Portal Watch conferences are where real estate portals discuss and sometimes catch a glimpse of their future. Recent...

Read More