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Exploring some of the worst-performing stocks can sometimes reveal fantastic candidates to add to a ‘best stocks to buy’ list. That’s because, as investors flee, shares can end up getting oversold, creating a bargain value investment for those with the patience to wait for a turnaround.
Looking at WPP (LSE:WPP), multiple price crashes throughout 2025 have dragged down the market-cap by over 55% since the start of the year. So much so that the stock’s price-to-earnings ratio now stands at just 10.6 – almost half the industry average.
So what’s behind the downfall of this media giant? And should investors consider adding it to their ‘to-buy’ lists now?
What happened?
There are a lot of factors influencing the WPP share price. But the primary catalyst behind all the recent sell-offs has been a series of profit warnings and guidance cuts.
In the group’s latest interim results, revenue slid by around 8% as client began cutting their advertising budgets in light of a weakening economic environment. The cyclicality of the advertising sector in which WPP serves is nothing new, and the business has a long track record of navigating ups and downs.
However, what seems to have spooked investors is the loss of several high-profile clients, including Coca-Cola, Mars, Paramount, and Starbucks. Part of this stems from competitive pressures, but there’s growing concern that artificial intelligence (AI) is also disrupting the business and wider sector.
With generative AI models now capable of doing a big part of the creative process, companies may simply be choosing to bring certain tasks in-house, threatening WPP’s traditional marketing relevance and undercutting its pricing power. And when pairing all this with a massive 47.8% downturn in operating profits, seeing the WPP share price get slashed in half isn’t too surprising.
Incoming recovery?
Despite the significant challenges facing this business, WPP’s not out of the race yet. A former Microsoft executive, Cindy Rose, is being brought in as the new CEO in September with plans to transform the business into a tech-driven marketing enterprise.
This process has already begun with management doubling down on its own AI platform – WPP Open. After all, if customers are going to rely on AI, why not make sure they switch to WPP’s proprietary model, keeping them on the client list.
At the same time, the business is preparing to cut its headcount by around 7,000 as part of operational streamlining. That’s obviously unpleasant and sad to see. But it also opens the door to £150m in annualised savings that will help restore profit margins.
The bottom line
WPP appears to be at a crossroads. Its traditional approach to doing business is undoubtedly getting disrupted. But there’s cautious optimism that with her tech and operational experience, Rose will modernise the company, capitalising on automation, data analytics, and tech-enabled marketing services.
Of course, there’s no guarantee of success. But if she does start delivering on promising, the stock’s current valuation could make WPP shares a lucrative long-term investment. Personally, I’m staying on the side of caution and waiting to see how the firm performs moving forward before considering a move for WPP to my own Buy list.
