Most FTSE 100 stocks had a great year in 2025, and the index delivered one of its best annual returns since the aftermath of the financial crisis. However, dozens of Footsie shares also had negative returns.
One of last year’s FTSE 100 laggards was the London Stock Exchange Group (LSE:LSEG), which endured a nasty share price fall of more than 20%. Let’s explore why this stock tumbled and whether it can bounce back in 2026.
Competition risks are rising
Financial data and analytics are the lifeblood of this business, accounting for over two-thirds of the company’s revenue. New artificial intelligence (AI) models are disrupting the sector, posing a huge challenge for traditional data providers, including the London Stock Exchange Group.
There are challenges on multiple fronts. Start-ups providing AI-powered market intelligence are offering agile, cost-effective solutions. This has raised uncomfortable questions about the value of the London Stock Exchange Group’s proprietary datasets.
For access to tools like LSEG Workspace, customers can expect to pay from $20k to over $50k annually. At that price point, the group’s vulnerable to firms seeking to undercut with innovative technologies.
Other legacy giants are also keen to defend market share aggressively. Bloomberg is the leader in this industry, claiming around 33.4% of the market against the FTSE 100 company’s 19.6%.
The New York-based business launched new AI tools in 2025 for document insights and company news. It also developed advanced chatbots to encourage users to stay inside the Bloomberg ecosystem.
Granted, the London Stock Exchange Group entered into a 10-year strategic partnership with Microsoft back in 2022, so it’s taking on the competition. But investors are impatient for proof of AI-driven growth that has yet to materialise due to phased product rollouts, cloud migration, and data platform consolidation.
IPO fundraising concerns
Another challenge facing the group is the slow death of UK stock market listings. In the first half of 2025, IPO activity for the London Stock Exchange sank to a 30-year low, although fundraising did pick up later in the year.
That said, a major overhaul to listing regulations by the Financial Conduct Authority in 2024 could start to yield positive results next year. Plus, in Rachel Reeves’ Budget, a three-year relief for stamp duty was introduced for newly-listed shares.
Time will tell whether these measures can revive the City’s status as a leading destination for global capital.
Where next for this FTSE 100 stock?
Despite the challenges facing the group, results have remained robust. In the third quarter, the firm delivered growth of 6.5% for combined subscriptions, a 6.4% increase in revenue, and it expects an EBITDA margin at the top of guidance for 2025. It also announced an additional £1bn share buyback.
The valuation has also become more attractive after last year’s share price fall. A forward price-to-earnings (P/E) ratio of 19.3 is below the 10-year historical average for this FTSE 100 stock.
Overall, there’s recovery potential for London Stock Exchange Group shares. They look undervalued to me, and I think they’re worth considering.
But potential investors should closely monitor cutthroat competition from rivals. This is a fast-moving space. The group will soon need to demonstrate that its products developed with Microsoft justify a premium pricing model.
