WPP (LSE: WPP) shares continue to take a battering, sliding 27% in the last three months. That’s painful for long-term investors, with the stock down 20% over the past year and a brutal 42% over three.

Stocks and Shares ISA investors wanting to inject a bit of excitement into their portfolio might want to consider buying this bad boy. They should tread carefully though.

What went wrong with this stock?

WPP’s never really kicked on from the departure of inspirational/controversial CEO Martin Sorrell after 33 years in 2018.

The pandemic hit advertising hard, as clients slashed marketing spend to conserve cash. Then came the economic slowdown, rising interest rates and, more recently, concerns over Donald Trump’s tariffs.

While under-pressure CEO Mark Read has worked to simplify the sprawling agency network, the WPP share price just keeps falling.

Two years ago, Read was bullish on artificial intelligence-powered advertising, claiming it would be key to WPP’s future growth. Yet, so far, AI hasn’t delivered the transformational boost investors were hoping for.

Revenues down, rivals up

Full-year 2024 results, published on 27 February, dealt WPP yet another blow. Read warned revenues could fall by up to 2% this year, after a 1% decline in 2024. That’s not great, but the real alarm bells came from its 20% revenue slump in China and weak performance in the UK and US.

WPP’s French rival Publicis has pulled ahead, forecasting up to 5% revenue growth this year. To make matters worse, US ad giants Omnicom and Interpublic announced a $31bn merger, creating a new mega-rival.

Investors weren’t impressed. Especially with Read admitting he was “cautious” about the outlook, citing economic uncertainty and pressure on corporate spending. 

Selling off

He’s been making moves to stabilise the business, including hiving off assets like a stake in PR firm FGS Global for $775m, and possibly divesting its Kantar Worldpanel unit. However, some planned sales, like in-flight entertainment provider Spafax, might only fetch £50m-£75m. Small change for a company that’s still valued at £6.5bn.

The 13 analysts covering WPP have set a median target of 742p, implying a 23% upside from today’s levels. Add in that 6.5% yield, and we could be looking at a total return of nearly 30%, if those forecasts hold up.

But that’s a big if. Some of those predictions may not yet reflect the latest share price slump, and further downgrades are possible.

Frozen dividend

I’ve always seen WPP as a growth stock, but today it resembles a high-risk dividend play. The payout’s covered 1.4 times, which is reasonable but not totally comforting. However, the 2024 final dividend was frozen at 24.4p, same as in 2023. So we may not expect much progression from here. 

WPP’s cheap after its recent tumble, but it’s cheap for a reason. More volatility seems baked in, I’m afraid, so it’s clearly not a ‘perfect’ share for everybody’s ISA.

But it could be an interesting ISA pick for investors with an appetite for risk. If WPP stabilises and gets back on track, the combination of dividends and a potential rebound could pay off, over time. Plenty of patience is required though. Plus a tin hat.