Growing Wealth by Avoiding Fragility

The Class of Classifieds

The Class of Classifieds

Behold the performance of a selection of ‘classifieds’ businesses since February 1st 2025:

Auto Trader, Vend, Scout24, Baltic Classifieds Group (BCG), Rightmove

With some partial possible exceptions, this impact can be attributed to fears about AI/LLM on the classifieds’ business model.  On an individual investor level, many have decided the uncertainty is too high and they no longer want to be involved, more often hitting the bid and bringing their offers lower. Short sellers have added fuel to the fire. On an aggregate level, all this activity shows up as the market’s frantic scramble to re-price businesses for the most recent information and developments. It is reasonably early innings, in that the game probably won’t be decided for more than a year. But given the scale of the de-ratings of these recurring cash flow machines I think it’s appropriate to survey the field and differentiate, where important, between the players. 

(The partial possible exceptions I eluded to above are the product changes that Auto Trader rolled out in November 2025 that were met with robust objection by independent dealers and resulted in some churn, as well as idiosyncratic downgrades to earnings expectations at BCG and Rightmove.)

The story so far

The most dominant classifieds businesses are mini-Googles, created in the likeness of the internet God. That is to say, they can provide an incremental eye-ball or lead to a listing vendor at no incremental cost. Traffic acquisition costs are minimal, and they benefit from a live and searchable inventory, posted by vendors, of whatever the consumer is seeking. That means

 

Operating margin comparison: Google Search / Classifieds

 

Just as Google has managed to generate high-teen % annual revenue growth over many years  

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