We’re in the middle of earnings season, which means we could see stock prices swing wildly depending on how good or bad the results are. In one UK share, half-year results were not as expected at the start of the week, causing share prices to fall. But does this mean a good deal opportunity?

Weaker moods

I’m talking about Reception (LSE:RCH). Last week’s decline now represents a 42% decline over the past year. The biggest reason for the short-term decline were the results of the first half of the year, which disappointed investors. Revenue for the period fell 9% to £232.9m and adjusted operating profit fell 4.1% to £43m. As a result, the company halved its interim dividend to 1.44p per share and made a statutory pre-tax loss due to the printing plant closure and restructuring.

As noted in the report, the management team is already taking steps towards disciplined cost activity: “The restructuring in 2025, together with the rationalization of our printing facilities, resulted in a 10.3% reduction in adjusted operating costs, compared to our target of 5-6%”.

Interestingly, management pointed to a radical change in the way readers discover news online. Referrer traffic on Google dropped 55% as AI-generated search summaries and changes to search algorithms reduced visits to Reach sites. Page views on the platform dropped by about 40% and the stock price fell as investors analyzed the results.

Direction of travel from here

From my perspective, the large question is whether the results represent a transient setback or a lasting structural change. If the structural decline in print continues, I believe AI-driven search engine changes will pose the biggest threat the company has faced in years. While Reach is pursuing artificial intelligence licensing agreements, expanding video content and growing off-platform audiences on social media, there is no guarantee that these initiatives will replace lost advertising revenue quickly enough.

However, there are several reasons why now may be a good time to buy shares. The core business appears more resilient than the headline numbers suggest. Cost reductions in the first half of the year almost completely offset the revenue decline, actually increasing adjusted operating margin to 18.5%. Adjusted earnings per share rose even slightly to 11.1p despite falling sales, underscoring management’s ability to protect profits through efficiency measures.

Another issue that struck me is cash flow. Cash conversion has exceeded 100%, so I see no immediate concerns about the company’s financial stability.

The price-to-earnings ratio is 1.67. This is an incredibly low level, but should be treated with caution. Sure, it could mean a bargain. However, it could also show that investors simply don’t want to own the stock.

In summary, if finances stabilize over the next few months, today’s share price may already reflect an overly bleak scenario. While this could therefore be called an opportunity, it is a high-risk opportunity given the concerns surrounding search engine AI changes. I stay away, but people with a greater risk appetite may want to consider it.

Is it worth investing £5,000 in Reach Plc now?

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Jon Smith does not hold any position in the companies mentioned.