Daily market update: Rightmove, Tesla, IAG

A negative reaction to two big name corporate results in the UK weighed on the FTSE 100, dragging it down 0.3% to 9,707 as investors worried if more companies would follow suit with gloomier outlooks.

British Airways’ owner IAG reported softer US economy leisure trading while property portal Rightmove shocked the market with news that investments would slow profit growth.

Investors are feeling nervous in the wake of a mild tech sell-off in recent weeks, and the slightest hint of bad news has brought on a migraine.

In the case of Rightmove, companies must spend money to make money, but investors are often short-term in their thinking and anything that depresses the profit outlook often gets a thumbs-down reaction.

What’s interesting is how the mention of AI would have previously received a ticker-tape parade from investors, now it’s not necessarily the golden ticket to a booming share price.

Rightmove

The market did not like Rightmove’s latest update one bit as it warned of slower profit growth in 2026.

This is a function of a big increase in investment, largely in artificial intelligence. Investing for future growth is not a bad thing but the scale of the market’s negative reaction implies real scepticism about its decision to put so much money into AI.

In the longer term Rightmove suggests this expenditure will drive double-digit underlying profit growth, however, the market is far from convinced by this jam tomorrow story.

It’s possible to see how AI might help Rightmove operate more efficiently, make greater use of its increasing amounts of data and enhance user experience on the site.

However, there is clearly concern that Rightmove is jumping on the bandwagon in dialling up its AI spending.

The market seemed to be happy with Rightmove simply focusing on its existing strengths, underpinned by a leading market position which makes it a must-have product for estate and letting agents and the go-to source for purchasers and renters.

Do the expanded ambitions in AI suggest growth under its existing model is starting to be harder to come by?

Tesla

The revelation that Norway’s sovereign wealth fund would be voting against Elon Musk’s $1 trillion pay package earlier this week clearly didn’t offer any insight into the outcome of the vote.

The victory was decisive – for Musk’s retail investor fans, some of which greeted the news at Tesla’s Texas gigafactory with chants of ‘Elon, Elon’, the reasons for approving the award are obvious.

There are logical reasons for other shareholders to have also given their assent. To reach the astronomical headline figure Musk must hit some extremely demanding targets.

Earnings will have to increase 24-fold and Tesla’s valuation will have to supercharge from $1.4 trillion to $8.5 trillion. This will mean moving from being an electric vehicle manufacturer to a much broader AI and technology business. In this sense there was little to lose for most Tesla holders in approving the deal. If Musk does get the $1 trillion, shareholders will have done very nicely indeed.

International Consolidated Airlines

For decades British Airways’ transatlantic routes have been a mainstay of the business so it’s not a surprise to see weakness in this area provoke a negative market reaction for parent company IAG.

Passenger demand in Europe for flights to America has been affected by strict immigration controls under the Trump administration and a scaling back in corporate activity between the US and Europe.

This contributed to a disappointing set of third-quarter results which saw the shares lose some altitude after a heady ascent over the last 12 months.

On the plus side, IAG continues to believe it can navigate its way to its full-year guidance and it is seeing strong demand in the premium passenger segment.

After a fairly untroubled flight for the stock to pre-pandemic levels, the latest update is a reminder that the seatbelt sign might still go on from time to time and shareholders have to be prepared for some turbulence along the way.