By Mackenzie Tatananni

WPP stock sank Wednesday after the advertising giant said it expected its customers to continue cutting back on ad spending.

U.S.-listed shares were down 16% to $29.99, heading for a 52-week low and their lowest close since April 2020. Shares of WPP sank 17% in London.

The steep losses came after the company shared a trading update for the first half of 2025, in which it noted a "deterioration in performance" as the second quarter progressed.

The update painted a sobering picture of the state of advertising investment. WPP said it expects like-for-like revenue, excluding pass-through costs, to decline by 4.2% to 4.5% in the first half of the year with a decline of 5.5% to 6% in the second quarter alone.

While the outlook includes one-off factors, it is nevertheless below management's expectations, WPP said. The company attributed the decline, in part, to "continued macro uncertainty weighing on client spend," a headwind that was also factored into the full-year outlook.

The company said it now anticipates LFL revenue to decline 3% to 5% in the fiscal year, compared with a prior forecast of flat to down 2%.

"Since the start of the year, we have faced a challenging trading environment with macro pressures intensifying and lower net new business, " CEO Mark Read said in a statement. "While we expected the second quarter to be similar to the first quarter, performance in June was worse than anticipated and we expect this pattern of trading in the first half to continue into the second half."

Chief Financial Officer Joanne Wilson echoed the sentiment on a conference call. "The impact of the macro on current client spending has been more pronounced in the second quarter than we anticipated, and more than we had assumed at the bottom end of our original guidance," Wilson said.

WPP is among the world's largest marketing agency holding companies, with a market capitalization of around $7.7 billion. In this way, the forecast could be seen as a bellwether of the advertising industry -- but it could also spell danger on a broader scale.

The company counts established players in the tech and auto industries among its largest customers. WPP noted in its annual report for 2024 that its top 10 clients represented 20% of revenue -- at the time, these included Google, Apple, Comcast, and Ford Motor.

WPP is also seeing a trend of lower advertising investment worldwide. In June, the company cut its forecast for global advertising growth to 6% in 2025, down from 7.7%, as "disruptions to global trade and continued deglobalization pressures" continued to weigh on spending.

Advertising is often viewed as a bellwether for consumer spending, as it's one the first areas to see cuts when companies brace for a market downturn. As consumer spending makes up two-thirds of the U.S. economy, this makes WPP's forecasts worth watching.

Macroeconomic uncertainty has taken a toll on consumer confidence and sentiment alike, with both measures plummeting in April amid trade war concerns.

Consumer sentiment fell to its second-lowest reading on record in May, while confidence posted a surprise decline in June as tariff woes lingered. While both measures have rebounded from their April lows, they won't be returning to pre-pandemic levels any time soon.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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July 09, 2025 10:42 ET (14:42 GMT)

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