The Daily Mail finally said yesterday what I've been waiting to hear for a while; property advertising is starting to flag.
Property ads have been one of the strongest areas for many papers, both national and regional, till recently. But it looks as if mortgage rate rises, the Northern Rock debacle and high price levels are having their effect. There's less volume - this has been confirmed to me by several agents - and agencies are now looking to reduce their advertising budgets.
Which makes Rightmove look very vulnerable. Despite a recent fall, the stock is still trading where it was in February this year. But if newspapers are feeling the pinch now, Rightmove will certainly feel it within the next six months. And with a PER of 54x according to DigitalLook's consensus forecasts, it's far higher rated than the newspaper stocks which trade around 10-15x earnings. Yet unlike the newspapers it has no other advertising areas to prop up its profits. Time to short it perhaps?
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