Below 19%! This ftse 100 stock was having its worst day in 34 years

WPP (LSE: WPP) I was having a surprise in the Ftse 100 Today (February 27). Previously, it was 19% and headed for its worst day since the early 1990s!

However, while I write, some profits are raised and is “only” 16%. Even so, at 646p, it is the lowest level of WPP in more than four years.

The action has been a disappointment for a long time. It has dropped 9% in 12 months, 14% in five years and more than 50% in a decade. Meanwhile, dividends have been up and down over the years.

Mixed results

The culprit of the great fall today was the results of the fourth quarter of the advertising company and the little inspiring orientation for 2025.

In the last quarter of 2024, the underlying income fell 2.3% similarly, with a growth impacted by the weak advertisement expenditure of the customers. Growth in Western continental Europe (+1.4%) was compensated by weakness in all other markets:

• North America: -1.4%
• United Kingdom: -5.1%
• Rest of the world: -4.8% (including a 21.2% drop in China)

Throughout the year, underlying income fell by 1% on a base similar to £ 11.35 billion. This was a little worse than expected, with analysts predicting a 0.4%decrease.

On the positive side, the operational profits grew by 2% in a base similar to £ 1.71 billion, complying with market expectations, while the adjusted free cash flow increased to £ 738 million from £ 637 million, driven by a strong management of working capital. The operating margin improved from 14.8% to 15%.

Hard out there

However, the orientation for this year was descending, since management remained “cautious“Due to the challenging market conditions. Expect the underlying income to be plans or low of up to 2%. The operational margin is expected to be overwhelming.

The action seems cheap, quoting to less than eight times this year's prognosis profits. And there is a 6% decent dividend yield after the company proposed a final dividend of 24.4p per share, which raises the total to 39.4p (as well as 2023).

However, in this case, I believe that a multiple of low assessment is probably justified. The company has stopped growing and has to restructure and rationalize operations to squeeze improvements on profit margins.

Ceo Mark Read said it was a “Difficult market out there“Today, it is a fair comment.

Would you consider investing?

WPP used to be the world's largest advertising group, but lost that title in France Publicis last year. Meanwhile, the rivals Omnicom and Interpublic Group I have announced a mega fusion, subject to regulatory approval, to create a massive advertising conglomerate.

I fear that competition could be intensified in the era of generative artificial intelligence (ai). Once, the firm has developed WPP Open, an ai platform that uses generative to help in the creation of content and custom marketing campaigns. He intends to invest £ 300 million on the platform, and last year he played a key role in obtaining new business profits with amazon, Johnson and Johnson, and Uneilever.

However, this threat of Ia creates a lot of uncertainty in my mind. Brands can use ai -driven platforms to create and optimize the ads, reducing their agencies dependence such as WPP. Fully new business models based on ai could arise, interrupting advertising players inherited with great creative teams.

If I wanted to invest in advertising, I prefer to consider Google Parent Alphabet either Goal. EITHER The trade tableA rapid programmatic advertising firm. They are better positioned for growth. WPP is not for me.