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WPP (LSE: WPP) is the worst-performing FTSE 100 share so far this year. It’s down 33.8%, narrowly ‘beating’ outsourcer Bunzl (-30.9%).
Since reaching a peak of 1,900p in 2017, the WPP share price has fallen 71% and now sits at just 548p. No amount of dividends along the way can make up for such a fall.
Struggling for growth
WPP used to be the largest advertising group in the world. However, it lost that title and now has a market cap of just £5.9bn. In today’s age of multiple $1trn+ tech juggernauts, that makes WPP almost look like a minnow.
Glancing at the firm’s numbers, it’s not difficult to spot a key problem here. In 2019, revenue was £13.2bn, with earnings per share (EPS) of 81p. In 2025, those figures are expected to be £12bn and 81p, respectively.
Now, some of this is down to the firm selling off business units over the years. But it’s also clear that WPP has struggled to find meaningful growth opportunities in an age increasingly dominated by tech giants like Meta and Google.
In Q1, revenue declined 5% year on year to £3.24bn, with no region displaying growth. Meanwhile, CEO Mark Read warned about tariffs: “While WPP is not itself directly affected by tariffs, they will impact a number of our clients as well as the broader economy.”
Today (9 June), WPP announced that Read will retire at the end of the year. Perhaps a new CEO will write a fresh script for the ad agency in 2026, helping reboot growth.
That said, I worry things could get worse as generative artificial intelligence (AI) tools improve over the next few years. Back in February, I wrote: “[The] AI threat creates a lot of uncertainty in my mind. Brands might use AI-driven platforms to create and optimise ads themselves, reducing their dependence on agencies like WPP.”
My fear already appears to be coming true. Last week, there was a report that Facebook and Instagram owner Meta is aiming to empower brands to fully create and target ads with its AI tools by the end of 2026.
In other words, there’s a real chance that legacy ad agencies could increasingly get cut out as the middlemen. Meta’s tools can now automate ad creation, targeting, and execution, tasks that agencies traditionally charge clients to handle.
Value on offer
It should be noted that WPP has been investing heavily in AI tools itself, and has very established relationships with massive global clients like Unilever and Procter & Gamble.
Currently, the stock is trading at just 7 times forecast earnings for 2025. Plus, there’s a 7.2% dividend yield, which is the fifth-highest in the FTSE 100. A slight dividend cut is expected, though, according to my data provider, giving a forecast yield of 6.7%.
Still, were a turnaround to materialise, this dividend stock could generate very solid returns from this point.
Possible value trap
Stepping back, I don’t think WPP is in any immediate danger, but rapidly evolving AI tools could negatively impact its future revenue streams. This adds too much uncertainty for me, and I worry that the stock might be a value trap.
I think there are more attractive FTSE 100 stocks for my portfolio right now.
