Rightmove tumbles on talk of Google entering UK property market - UKCIG Property

The mighty Google strikes again. A report that the company is planning to move into the UK property market has sent shares in Rightmove tumbling by more than 9%.

Google is said to be talking to UK estate agents about launching a property portal, which of course would cut across Rightmove's business. Hence a 51.5p decline in the latter's share price to 506p.

But Lorna Tilbian at the company's broker has issued a note playing down the threat from Google. She said:   
Google has launched a property site in Australia, and could extend this to the UK in 2010. We believe that such a move would be an attempt to drive traffic through its site, but do not believe that it poses a material threat to Rightmove.

    In our view, Rightmove has a firmly established position as one of the UK's leading websites and has a commanding share of more than 80% of the four leading property portals. The value added by Rightmove in generating leads is clearly proven, and the cost of the product is a small component of an estate agent's cost base and remains modest in comparison with newspaper advertising.

    We note that Rightmove has proven effective at defending its market position against Globrix/NewsCorp, Prime Location/DMGT and Tesco. We believe that Rightmove's market position is secure, and have been encouraged by the group's recent initiatives to drive display advertising . We retain our buy recommendation and would view any near-term impact on the shares as a buying opportunity.

Plenty of buying opportunity at the moment, then, since the company is the biggest faller in the FTSE 250.

UKCIG Property News, December 2009