Congratulations WPP – your share price has recovered to its 2001 level

It may seem hard to believe, but today we celebrate the resurgence of WPP’s share price to the level at which it stood 10 years ago – on 12 January 2001 or thereabouts.   Yes, it’s a fact.  WPP’s share price has remained depressed for a whole decade.


Any reasonable investor would have hoped to see some capital appreciation in that period.  That being the case, some consolation may be drawn from the fact that the FTSE All-Share Index has not performed much better, adding only 5.7% to its value in the same period.


 


However, the lack of much upside potential must be a concern for every marcoms company that might otherwise regard a stock market listing as a helpful way to realise some capital for hard working founding executives while retaining an element of control over their company’s destiny.


Of the marcoms companies that were listed on the stock exchange in January 2001, just three are able to show any improvement in their share price today.  In addition to WPP, they are Aegis Group and Creston.   Only Aegis can claim a 10% price growth in the decade and that’s not enough to justify the investment over the period.  Among the latecomers, only shares in M&C Saatchi, Motivcom and Progressive Digital Media have added value since arrival.


That leaves 18 companies that have either lost value or failed completely in the decade – evidence if ever it was needed that the industry has so far failed to deliver a reliable model for achieving sustainable value growth beyond the first flush of youthful ambition that expires when founders cash in their shares.   And that must have something to do with the fact that few, if any, entrepreneurs in the industry have the desire to do so.  A sobering thought.


Bob Willott is editor of “Marketing Services Financial Intelligence” at www.fintellect.com.

  • Alex Batchelor

    An interesting fact, but this is a bit harsh on WPP – timing is everything in stock markets and WPP have not been more than 0.3% per annum worse than the index. Suspect we all have some money in an account that is performing more than 0.3% worse than the best, or even the average, of the market. I have 4 children, all of whom have £1,000 invested in the FTSE on the day they were born. Only the 14 year old and the 13 year old are in the money, the 11 year old and the 9 year old are both still under water. I accept that this doesn’t include dividends (as the DAX does) – but am damn glad I bought them all a case of wine as well! If they were all a decade older they would have been wealthy, but they need some good years ahead if it is going to be worth much when they are 18. For their savings a Post Office Savings Account would have been much better. Does anyone still feel that less regulation is a good thing for banks and financial salesmen ……

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