Almost £300m has been wiped off the value of Rightmove after it was hit with a £1.5bn lawsuit over claims it charged estate agents "unfair" fees.
The property giant's shares plunged by as much as 8.7pc early on Wednesday after former Competition and Markets Authority panel member Jeremy Newman filed the legal claim. The slump wiped as much as £280m from its valuation, though the stock later recovered to close down 1.5pc.
More than 250 estate agents have put their weight behind the legal challenge, which alleges that the FTSE 100 property giant has been charging "excessive" subscription fees to use its property listings portal.
The claim, which has been filed with the Competition Appeal Tribunal , could be worth as much as £1.5bn in damages. Rightmove is accused of breaking competition rules by using its market share to pressure estate agents to pay higher fees.
Mr Newman said: "There has been an extremely encouraging response from estate agents since we announced this legal action. The stories shared by businesses, both small and large, have confirmed long-held concerns in the market about Rightmove's conduct.
"Filing this claim today advances the route to meaningful compensation for those businesses who have had very little choice but to absorb excessive fee increases for many years."
A spokesman for Rightmove said the business was aware of reports that an application to begin legal proceedings had been filed with the courts. It denies the allegations.
The spokesman added: "Rightmove is confident in the value we provide to our partners and consumers. The potential claim is without merit, and we will defend it vigorously."
Mr Newman's case is fully financed by Innsworth Capital, a funding arm of US hedge fund Elliott that is owned by billionaire Paul Singer.
The legal claim comes at a time of turmoil for Rightmove. The company runs Britain's most popular property website, accounting for more than 80pc of time spent on UK property listings sites.
However, its shares have remained depressed since November, when it lost more than £1bn in value after it warned plans to spend heavily on AI would hurt profitability .
Its share price has plunged by around 50pc since August last year.
Listed property companies were ensnared in a widespread AI sell-off in February, as traders bet on chatbots replacing estate agents as well as other service-based industries such as wealth management.
Johan Svanstrom, Rightmove's chief, has staunchly defended its recent investment push into the technology, telling The Telegraph this year that fears AI will replace agents and listings websites as intermediaries were "wildly overblown".
"AI [is] an opportunity from a business perspective, not a threat, and I absolutely don't think it's going to replace the people down to zero in the case of an estate agent," he said in February.
Mr Svanstrom also said he believed the future is in conversational AI. His strategy has included launching an app within ChatGPT, which will help Rightmove to learn how people find listings within conversational AI environments.
The legal case also comes as property groups are struck by wider uncertainty over the housing market.
The latest data from Nationwide shows UK house prices rising by 0.9pc in March, the fastest monthly increase in around 18 months.
However, economists at Nationwide recently noted that geopolitical tensions were clouding the outlook for mortgage rates and risked upsetting buyer confidence.
