A crashed FTSE 100 giant can spell disaster, but I reckon we can also find some of the best stocks to buy among the fallen. And they don’t come much more fallen than WPP (LSE: WPP). It was demoted to the FTSE 250 in December, and its share price has fallen 65% in the past 12 months.
It was once the biggest advertising group in the world and worth £24bn. But the company taken to greatness by founder Sir Martin Sorrell now has a value of just £3bn. In many ways it might look like a disaster to avoid. Quoted in The Guardian at demotion time, media analyst Alex DeGroote opined “there is no obvious route back.“
But looking beyond the obvious, might WPP turn out to be one of the best recovery candidates among UK stocks right now?
What went wrong?
We can largely summarise the problems at WPP in a single common buzz phrase: artificial intelligence. Globally, companies were tightening their advertising budgets, and WPP started losing some key clients.
Everyone these days seems to want AI this, AI that, AI everything. And competing agencies around the world saw where things were going, leapy on the new tech, and started to draw customers away from old stuck-in-the-muds like WPP. It was doing it, but was behind the curve.
All of this, plus profit warnings, dominated 2025 for WPP. Then came news that CEO Mark Read was out, to be replaced by Cindy Rose. At the time of the announcement, the incoming new boss said: “We have and continue to build market-leading AI capabilities, alongside an unrivalled reputation for creative excellence and a preeminent client list.”
Strategic review
And by the time of October’s third-quarter update, Rose told us that “we will position our offering to be much simpler, more integrated, powered by data and AI, efficiently priced and designed to deliver growth and business outcomes for our clients.“
We should get some insight into how that’s going on 26 February. WPP will report full-year results that day — although I’m sure nobody’s expecting them to be that great. More importantly, we’ll have an update on the company’s strategic review. I doubt many investors will see WPP as a top stock to buy before we hear the latest. But I wonder if this might just mark the start of the turnaround.
Same again please!
Am I seeing a parallel with Aviva here? That’s a company in a very different business. But to my eyes, there are a few similarities. Aviva found itself in a rut while competitors moved on. It became bloated, unfocused… and needed to slim down and prioritise its key business. And that was achieved under a new boss, in the person of Amanda Blanc.
The Aviva story shows it can take a few years to steer a large ship back on course. But so far, I like what I hear from Cindy Rose. And I think WPP really is a recovery stock for patient investors to consider at today’s depressed price.
