Investors wary of AI agents stalking classified online sites such as Seek, REA Group and Carsales
Some investors worry personal AI agents will soon shop for properties, jobs or cars on your behalf, cutting traffic to popular websites may slow. Experts have a different theory.
Australia’s top investors and C-suite executives are scrambling to assess the threat agentic AI presents to the business models of dominant online advertising portals such as Seek, REA Group and Carsales.com.
Shares in Carsales owner CAR Group jumped 10 per cent on Monday to reverse months of selling as it reported a net profit increase of 16 per cent in the six months to the end of December to $143 million on sales that grew 14 per cent to $626m.
“We see AI as a critical enabler and we are embedding it into our products, platforms and operations,” said group chief executive William Elliott.
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Investors have wiped hundreds of billions of dollars from the valuations of platform and software businesses this year because they are perceived as vulnerable to shifts in the way consumers search for properties, cars or jobs.
David Berthon-Jones, the joint chief investment officer at Aequitas Investment Partners, said the sell-off has created some buying opportunities, but the potential for disruption from personal AI agents, such as Claude by US tech giant Anthropic, is real.
“In the future if you hunt for, say, an Audi A5 near you, instead of going to Carsales.com, you could use your Claude Browser that’s been open all morning and it would scrape not just Carsales’ website for data, but everything on the net, including Gumtree,” Mr Berthon-Jones said.
“So, it’s search would be much, much wider. And you remove another layer that sits between the consumer and the end product you desire.”
The worries around online advertising models being disrupted have seen CAR Group shares slide for six months, though Mr Berthon-Jones said Aequitas recently bought shares in the auto-classifieds business because he felt the cheaper valuation presented an opportunity.
“Who controls attention is the battle for these websites,” he said.
“So it’s about whether a person’s process for starting a search will be to go to the REA or Carsales websites, or if you do that in a new workflow where agentic AI is already open and running as you’ve been using it all morning to buy your wife flowers, as it had read your calendar and knew it was her birthday and knew your credit card details.
“So then your next search begins in that ecosystem, and I think there’s little these companies will be able to do about that over the next five or 10 years.”
Sell-off as an opportunity?
Other investors believe the agentic AI threat to the online advertising portals is overblown, as they are beneficiaries of strong two-sided network effects.
These exist as a car seller will always use the website he thinks has the most buyers to help obtain the highest offer price. While anyone interested in buying a car will always use the website he or she thinks has the most vehicles for sale at the best prices.
Chris Stott, chief investment officer of 1851 Capital, also said AI is unlikely to threaten the core sales model of charging estate agents or car dealers to advertise, while potential buyers are allowed to visit the websites for free.
“REA is the biggest lead generation tool for the agents, I can’t see that changing,” Mr Stott said. “Same with Carsales and the auto dealers, so I think these business models will hold up through the threat of AI.”
The uncertainty around whether AI will change how online advertising models reach consumers has spread globally. British property portal Rightmove is off 29 per cent in 12 months, while Swedish-listed European property portal Hemnet has plunged 68 per cent over the past year. On the Australian Securities Exchange, REA Group has now tumbled 36 per cent in 12 months.
“What’s really changed is that every investor is now uncertain about what that future earnings growth rate looks like,” Mr Berthon-Jones said.
“But it’s harrowing none the less when you see stocks like Atlassian down 70 per cent. It’s been a proper bloodbath.”
On Monday, Carsales told investors it expects adjusted net profit to grow between 9 and 13 per cent over the 12 months to June 30. It also lifted its half-year dividend 10 per cent to 42.5¢ per share.
