As one of the world’s largest advertising & marketing groups, WPP has been stuck on a downward trajectory since the start of 2025, with over half of its market-cap wiped out since last July.

What happened? And could now secretly be a buying opportunity before WPP shares start bouncing back?

What happened?

With this UK stock having been aggressively sold off, WPP shares are trading at their lowest price since 1996. And while the valuation collapse might be overblown, it isn’t difficult to understand why investors are fleeing.

Throughout 2025, the company posted a parade of profit warnings, continually downgrading revenue and earnings projections, along with the announcement of a major slash to shareholder dividends.

This negativity has only been compounded by fears that the long-standing industry titan is being ravaged by artificial intelligence (AI) disruption. After all, with AI models capable of designing and generating entire marketing strategies, why would businesses hire WPP?

The firm’s already seen some high-profile clients head for the exit, while others have notably cut back on spending. And the negativity among investors has only been amplified by the stock’s ejection from the FTSE 100.

Obviously, this is a fairly disastrous situation. But could WPP potentially reward contrarian thinkers and bounce back to new highs?

Overlooked potential

Under new CEO Cindy Rose, WPP’s launched a brand-new strategy called ‘Elevate28’. It’s a multi-year restructuring programme that involves:

• Delivering £500m in annualised savings by 2028.
• Consolidating the firm’s endless list of businesses into four distinct divisions.
• Investing £300m into WPP Open, the firm’s own proprietary suite of generative AI tools.

It’s a pretty ambitious and aggressive strategy seeking to seemingly overhaul the entire business, transitioning it from a legacy marketing consultancy group to an AI-driven tech platform with expert consultancy attached.

The question is, will this attempted evolution be a success?

Executing restructuring programmes of this scale is notoriously difficult and fraught with executional risk. Yet with WPP shares now trading at a forward price-to-earnings ratio of 3.8, it seems the market’s already expecting failure.

Therefore, if the company does succeed, a subsequently share price rally could deliver jaw-dropping gains similar to what Rolls-Royce generated over the last few years.

A risk worth taking?

Right now, WPP shares are cheap for a reason. Elevate28’s still in its early days, with the underlying business seemingly still deteriorating. And if the attempted transition fails, then today’s dirt cheap share price could actually be a value trap rather than an opportunity.

With that in mind, I think the best course of action is to wait for some signs of rebound progress. If some green shoots of recovery start to emerge and the share price remains depressed, that’s when the odds of WPP being a top stock to buy drastically increase.

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I have been thinking about whether to hang on in the hope of price recovery – or dump the lot at a loss.

An innovator that’s been out-innovated

The share in question is advertising group WPP (LSE: WPP).

Going back decades, WPP was a trendsetter. By buying up storied advertising agencies and building economies of scale, it was able to make large profits.

But the advertising landscape has changed. Investors fear what that means for the FTSE 250 company, explaining the 73% slide in its share price over the past five years.

The key problem is that lots of what WPP used to offer its clients is no longer valued like it was. Clients can do it themselves for little money.

So WPP’s offering looks less compelling to customers than it once did. Revenues last year fell 8%.

WPP isn’t standing still

As an investment, WPP had been a disaster in recent years.

Not only has the share price slid, but the dividend was cut during the pandemic and again last year. In fact, last year’s dividend per share was just a quarter of what it had been back in 2017. That is painful for shareholders and helps explain why the share has been pushed down so much.

More positively, though, that means that the yield currently stands at 6%, well above the FTSE 250 average.

Plus it is not all doom and gloom. Last year’s results were terrible in my view, but even in that annus horribilis, at the operating level WPP still made a substantial profit and generated sizeable cash flows.

It has launched a strategic plan focused on stabilising the business this year, before returning to growth. By reorganising its business structure and expanding its own use of AI, WPP hopes to turn the threat posed by the technology into an opportunity.

Success on that front is far from guaranteed. But the company does have expertise and creativity its clients do not. I think it could well use AI to deliver that more cost effectively.

I think this is a risky bargain

The share price collapse in recent years underlines the fact that the risks here are high.

If AI eats the ad industry’s lunch, even WPP’s turnaround plan might not be enough to stop revenues and profits from declining further. Even from the current price, the share price could yet implode.

But I think the share price fall has been overdone.

eWPP’s enterprise value (its market capitalisation and adjusted net debt) is around £4.8bn. That is just four or so times last year’s adjusted operating cash flow pre working capital.

That looks cheap to me even if the company simply stabilises – but I think over the long term, profits could grow again.

If that happens, over the coming years I think the share price could soar from here. I plan to hold my shares.

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Since February 2025, its share price has fallen 65%, largely as a result of profit warnings issued in the following July and October. But does the group’s 2025 financial performance suggest the worst could be behind it? Or might there be more difficult times ahead? Let’s try and find out.

Delving deeper

The group’s results make for grim reading. Compared to 2024, operating profit was 22.6% lower and earnings per share was down 28.4%. Unsurprisingly, the group’s cash position has worsened too. Adjusted net debt increased by £425m (24.4%) over the course of the year. It’s also cut its full-year dividend by 62%.

It’s been six months since Cindy Rose joined as the group’s boss. She attributes WPP’s recent “underperformance” on “excessive organisational complexity, a lack of an integrated operating model and inconsistent strategic execution”. Note that she hasn’t blamed artificial intelligence (AI). Yet, many believe this could pose an existential threat to the industry.

Sam Altman, the founder of OpenAI, has been quoted as saying that AI will handle 95% of the work done by advertising agencies, marketers, and creative professionals. Even if his prediction proves to be wide of the mark, the consequences for WPP in the fourth industrial revolution are still likely to be significant.

Nothing to see here?

But the group views AI as more of an opportunity than a threat. Rose wants the group to become “the trusted growth partner for the world’s leading brands in the era of AI”.

How? Well, it announced Elevate28, its new strategy intended to stabilise the business in the short-term and then “build a new platform for growth and accelerate future performance”.

Part of this involves unlocking £500m of annual cost savings. This is ambitious. For context, the group’s 2025 headline profit before tax was £1.09bn. From an operational perspective, WPP intends to simplify its structure and offer “fully integrated, AI-enabled solutions through four core operating units”.

To demonstrate confidence in the business and this new approach, the chairman and chief executive each bought 50,000 shares soon after the release of the results. And despite its troubles, it must be remembered that the group still retains a huge global presence and an impressive blue-chip customer list.

My view

Personally, I have my doubts whether WPP will be one of the net beneficiaries of AI. Even if the impact isn’t as devastating as Altman says, the technology will give many companies the opportunity to do more of the less challenging work themselves and rely on the likes of WPP for the more creative human-led elements only.

But given this uncertainty, I reckon it would be better to consider investing in some of the developers of AI tools rather than those companies operating in industries that could be severely disrupted by them. Fortunately, there are plenty of these innovative tech stocks to choose from right now.

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I’ve been cautiously optimistic about the chances of a recovery. But it’s not happening yet, after a disappointing 2025 results update hammered the WPP share price by another 5% in early trading Thursday (26 February). It hit another in a recent line of 10-year lows. Am I wrong to think we might be near the bottom now?

Strategy update

The 2025 figures were poor, with revenue down 8.1% over the previous year. Headline operating profit plunged 23%, and year-end adjusted net debt rose by another 24%. As-reported numbers were worse, showing operating profit down 71%.

But shockingly bad though these results undoubtedly were, they weren’t what this latest update was really about. No, they’re eclipsed by a major strategy shakeup under new CEO Cindy Rose.

The company announced “‘Elevate28’, a multi-year strategic plan to simplify and integrate our client proposition, restore growth and drive long-term value for clients, talent and shareholders.” WPP plans to move from “a holding company structure to a single company.”

Right now, it’s a mess of different global businesses, which really aren’t as joined-up as they should be. A sprawling and badly-focused company like this provides easy pickings for the nimbler moves others are making with their increasingly AI-based offerings.

Costs and savings

Rose was brutally open: “Our recent underperformance has been driven by excessive organisational complexity, a lack of an integrated operating model and inconsistent strategic execution.” But she added that “these issues are all within our power to fix.”

Her new plans will come with costs, estimated at around £400m spread over the next two years. But the company expects to generate £500m of gross savings by 2028 — so it should more than pay for itself in that alone.

And the planned new company structure sounds like music to my ears: “WPP will become a single company, streamlined into four operating units across four regions, all unified by our pioneering agentic marketing platform, WPP Open.”

Short-term outlook

These plans sound suitably ambitious. But pulling the company to pieces and putting them back together again will bring pain. There’s a lot to get through along the way. And that includes 2026, which sounds like it’ll be another tough year.

Management sees like-for-like revenue less pass-through costs dropping “in the mid to high-single digits in the first half of 2026.” That should improve in the second half, though. Headline operating margin should remain weak, in the 12% to 13% range. Adjusted operating cash flow, after new Elevate28 strategy costs, should be between £800m and £900m.

Long-term aims

New boss, problems laid bare, fundamental strategy shift: WPP is ticking all the right boxes for me. Is this a hugely risky time to consider buying? Without a doubt. There’s a lot to be put right. But my optimism is still there. I’ll see what things look like at the halfway stage before I decide.

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Whether the future might start brightening for WPP (LSE: WPP), however, is a tricky question to try to answer right now. Once the world’s largest advertising company, its more recent woes have seen it unceremoniously kicked out of the FTSE 100 — the top rank for UK shares.

Am I wrong when I think I see a bit of sunshine peeking out from behind the clouds? We should get some insights on 26 February, along with results for 2025.

A turnaround year?

Now, don’t get me wrong. I’m expecting full-year accounts to make painful reading. But among the mix I think we could see the signs of a believable path back to successful growth.

After all, WPP’s new CEO, Cindy Rose, took the helm as recently as September 2025. And she’s surely going to be painting her picture of the future of the company rather than wanting to dwell on the past.

Hmm, there really might be a parallel with Rolls-Royce. The storming recovery in that case was also kicked off by the appointment of a new boss, Tufan Erginbilgic. Is it an omen? Let’s hope so.

Overcoming the past

WPP has been losing clients to more modern, AI-powered agencies. The company does include AI tools among its offerings. But it really hasn’t been at the technological leading edge. With October’s third-quarter update, the new boss confirmed: “I acknowledge that our recent performance is unacceptable and we are taking action to address this.“

There’s no surprise there. But what comes next? She said “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.” There are other planned changes, including “dramatically simplifying how we organise ourselves internally,” and “a disciplined approach to capital allocation with a focus on cost efficiency and maintaining a strong balance sheet.”

Is this similar to another UK share, this time insurance giant Aviva? Before its refocus, Aviva was stuck in old ways. Bloated, complex and confusing, it needed to be simpler, leaner and more efficient. Again, fresh management did the trick. CEO Amanda Blanc pulled off the needed transformation in impressive style.

Seeing the light

Maybe I’m being optimistic, but Cindy Rose strikes me as someone in a similar mould to these other turnaround champions. And she’s facing up to the reality, not implying any quick fix. “There is a lot to do,” she said, “and it will take time to see the impact.”

Will I consider buying WPP shares? I’ll wait for the results, but I’m edging towards positive. I bought Aviva, missed Rolls-Royce — maybe I might make it two out of three.

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But just because a stock is down, doesn’t necessarily mean it will go up again. How can we differentiate between undervalued companies suffering a minor setback — and those that might never recover?

Identifying good value

Lately, two big UK dividend names have been hammered and now sit close to 10‑year lows: WPP (LSE: WPP) and Domino’s Pizza (LSE:DOM).

On the surface, both offer tempting income, but for very different reasons. Think of them as two shops on your local high street: one struggling with a changing world, the other hit by rising costs and fussier customers.

Yet I believe they’re both well-positioned to bounce back. Here’s why.

A shifting ad landscape

WPP makes its money helping brands run ads across TV, billboards, social media and more. Its share price has dropped more than half in the last year as global ad spending has slowed and earnings have fallen.

Recent trading updates showed revenue shrinking and profits squeezed, as clients cut budgets and shifted to in‑house or cheaper options (such as AI). Subsequently, investors are wary about the company’s future. But it hasn’t given up, implementing an aggressive strategy to tackle the threat of AI.

With the share price having sunk so far, the yield has shot up towards double digits. But that big number comes with a catch: the payout ratio is very high and dividends have already been cut.

If its turnaround plan works and ad spending recovers, the current low price presents an opportunity. If not, further dividend cuts are still on the table.

This is a classic ‘high-risk/high-reward’ recovery play. Overall, I think it’s worth considering because its sheer size and brand familiarity give it a good chance of bouncing back.

Changing consumer habits

Domino’s is a different story: it runs the UK master franchise for the pizza brand people order on a rainy Friday night. Despite being a household name, the share price is down about 50% over the past year and is sitting at its lowest level in more than a decade.

Management has blamed weaker consumer demand, rising labour costs and higher bills for franchisees. As a result, it recently cut profit guidance, which understandably spooked the market. This has led to a notable rise in debt, adding to worries in a tougher, slower‑growing takeaway market.

On the income side, things look attractive. It offers a yield around 5.5%, with dividends covered by earnings and growing slowly over time. Plus, the core business is still profitable, with strong brand power, huge online ordering (around 90% of sales are digital), and scale advantages in dough, logistics and advertising.

If inflation eases and wage growth settles, margins could improve, and new menu ideas plus more stores might help profits recover.

The bottom line

For UK income investors, WPP’s low valuation and high yield is very attractive, but risky. It could be a value trap if the turnaround stalls.

Domino’s looks more like a solid takeaway favourite on sale. It has debt and competition risks, but with a steadier, better‑covered dividend that might be worth thinking about for a long‑term ISA or SIPP drip‑feed.

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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.

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Following a pretty disastrous 2025 where the media giant’s market-cap was slashed by more than half, investors are now presented with an ex-FTSE 100 stock trading at a 52-week low, a price-to-earnings ratio of just 7.7, and a staggering yield of 11.9%. What happened? And is this yield too good to be true?

AI disruption

The downfall of WPP has been driven by a combination of factors. However, one of the most prominent has been generative artificial intelligence (AI).

Using AI tools, companies are increasingly able to generate ads in-house at virtually zero cost. And consequently, a lot of WPP’s core services have been made largely redundant. This fear isn’t just investor speculation.

The number of prospective businesses looking to hire WPP have dropped sharply. And at the same time, several existing high-profile clients such as Coca-Cola and Paramount have ended their long-time relationships with the marketing enterprise.

The consequence has been an acceleration of revenue and cash flow declines, culminating in a change of leadership and profit warnings.

Needless to say, that’s bad news for dividends, drastically increasing the probability of a payout cut. In fact, that’s already happened. The stock’s interim dividend has already been slashed in half, from 15p to 7.5p. And looking at the latest analyst forecasts, the full-year dividend’s expected to drop from 39.4p to 24.3p.

In other words, WPP seems to be a classic yield trap… or is it?

Hidden recovery potential

Assuming the forecast is accurate, that puts WPP’s true dividend yield closer to 9.1% – a still pretty significant income opportunity for investors. And with the stock price falling so sharply, there’s a growing consensus that investors may have overreacted.

Rather than letting AI continue to disrupt the business, new CEO Cindy Rose has embraced the technology. And the firm has since created its own generative platform – WPP Open Pro – which launched in October.

Beyond pivoting the business towards a software subscription model, Rose is also executing a wider restructuring to simplify operations and introduce more disciplined cost controls. If successful, the group could soon see profit margins stabilise and cash flows restored, enabling the rebased dividend to be sustained.

What’s the verdict?

Overall, the new strategic direction seems prudent, particularly as AI disruption seems to be structural rather than cyclical.

However, seamlessly transitioning from a service-based revenue model to a subscription-based one is no easy task. And even if execution is flawless, dividends could still come under significant pressure due to a chunky pile of outstanding debts, limiting management’s financial flexibility versus rivals.

Put simply, the company has a lot to prove. And with Rose’s turnaround strategy only recently starting to get underway, investing in WPP shares today comes with significant risk. That’s why I’m not tempted to add this business to my ISA right now.

Instead, I’ve got my eye on other promising passive income opportunities.

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Will this turn out to be a long-term bargain? Or a value trap?

Juicy yield

The share in question is former FTSE 100 member WPP (LSE: WPP).

The advertising group has been grappling with fast-evolving changes in its industry landscape. AI has already replaced humans in some parts of the ad industry.

Investors worry that there may be a lot more of that to come, potentially hurting profits badly at legacy advertising groups – or even making their business models redundant altogether.

Previously, WPP was a juicy dividend payer. However, it halved its interim dividend per share last year.

Presuming that sets the expectation of an equivalently sized cut in the full-year payout, the move has reduced WPP’s attractiveness as income share.

Even presuming the full-year cut, though, that would still mean the share offers a prospective yield of 6.4%. That is not far off double the current FTSE 250 yield of 3.3%.

Lots to prove and an uncertain future

However, the dramatic slashing of the interim payout was an alarm bell. It followed a few years after another big cut in the WPP dividend.

Dividends are never guaranteed, as WPP has demonstrated painfully. As an investor, my mind is on the question of whether the dividend is sustainable even at its much reduced current level.

That leads onto the bigger question of what WPP’s business model will deliver from here.

The reality is nobody knows.

AI is already eating some of its lunch. But that is true for industry rivals too. WPP’s size could be an advantage if the industry shrinks and smaller players fold.

I also reckon AI could be an opportunity for the company. It could help bring some of WPP’s costs down. Longer term, in a world drowning in AI-generated content, there could continue to be a lucrative model in human-made creative work that helps set clients above the sea of AI noise.

Getting this right will be a struggle. As the FTSE 250 share’s collapse in the past year demonstrates, so far WPP has not done a good job of it.

In it for the long haul

Despite those challenges, I continue to like the investment case for WPP.

It has strong agency brands, a huge creative workforce, and deep, trusted relationships with a large roster of blue-chip clients.

Playing to those strengths and tacking to the winds of change in an AI-influenced landscape will be essential for WPP’s long-term survival, I reckon.

If it does that well, there could be value here that I do not believe the current share price reflects accurately.

I plan to hang onto this FTSE 250 share for the long term, in the hope of a turnaround in its fortunes.

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Once a heavyweight in the FTSE 100 Index, the global advertising group has suffered a sharp fall from grace. But after a punishing year, there are early signs that it could be gearing up for a comeback.

What’s happening to the share price?

There’s no doubt the company’s shares have taken a battering. Over the past 12 months, the stock has slumped by around 53.1% as I write on 9 January as investors lost confidence in the firm’s outlook.

Slowing advertising spend, profit warnings and lost client contracts triggered a wave of selling. But interestingly, in the last month alone, the share price has rebounded 8.2% as value hunters began circling.

Today, the shares change hands for around 343p, giving the stock a price-to-earnings (P/E) ratio of 10. That’s well below the FTSE 250 average and may suggest it’s pricing in a lot of bad news already.

The trailing dividend yield sits at a punchy 9%, but will fall from those lofty heights given the 50% payout cut in August 2025.

2025: a year to forget

The past year was a brutal one for the company and its shareholders. Advertising budgets have tightened amid economic uncertainty, hitting WPP’s core revenue streams.

The firm has also been slow to adapt to changing client demands, losing ground to more agile rivals that have embraced digital and data-driven marketing faster.

In October, the company issued a profit warning and confirmed the departure of CEO Mark Read. That was followed by news that WPP would drop out of the FTSE 100 for the first time in decades.

Could a recovery be on the cards?

Despite the gloomy backdrop, there are reasons for cautious optimism. New CEO Cindy Rose has signalled a clear intent to streamline operations, focus on growth areas and rebuild investor trust. That includes doubling down on AI-powered marketing platforms and strengthening WPP’s position in high-demand areas like data analytics and digital strategy.

Recent reports also suggest the company has secured several new contracts, including a UK government contract worth up to £2bn announced in December. That alone should give investors some confidence in the company’s ability to win and retain customers.

At the same time, the current valuation may appeal to long-term investors willing to take a view on recovery. With such a steep fall already, any signs of operational improvement or stabilising revenues could give the share price room to run.

My verdict

WPP is certainly not out of the woods. Significant challenges remain, from fierce competition to questions over its sustainable dividend level. Any investor considering the shares must be comfortable with the heightened risks of a prolonged turnaround, but that’s the nature of the beast in value investing.

However, this is still a global brand with deep client relationships and a long history of success. If management can execute its strategy and capitalise on the power of AI and data in 2026, then the shares could look cheap in hindsight.

While I won’t be taking a bet on WPP in 2026, it could be one for investors considering FTSE 250 recovery opportunities to look at more closely.

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