Purplebricks’ share price dropped yesterday to barely over 200p - its lowest level for some 18 months and reflecting a near 40 per cent drop over just the past six months.
Even analysts say, off the record, that it is difficult to give a specific single reason for the agency’s share price decline, which has accelerated in recent months.
There has been growing criticism of the agency’s refusal to give concrete completion figures on its sales but this began long before the current share price decline; likewise the high profile TV consumer investigations into the agency do not coincide with the trend.
Many of the stories concerning complaints about the agency to the Advertising Standards Authority also pre-date the share slump.
Meanwhile the agency’s own buoyant attitude has continued in recent months, despite its stock market performance.
Over the summer Purplebricks co-founder Michael Bruce said traditional agents sold only around 50 per cent of the homes they listed so spend half of their income from commissions underwriting the costs of the home owners who fail to sell.
Just a fortnight ago Purplebricks’ annual report claimed that 81 per cent of its listings were sold within 12 months, in the year to April - although sold, in this case, meant completed, exchanged or sold subject to contract - and at the same time the company announced a further expansion of its US business.
Purplebricks’ share price closed last evening at 208.0p.
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Harsh reality beginning to bite, shine wearing off, shares fall when investors lose faith
Maybe the truth is coming out, people are starting to realise that all that glitters is not gold!
I will again make a direct comparison between Purpe Bricks and Wonga. Both claim to be the consumers champion, both offered a service with sneaky small print, both investigated continuously for their claims in advertising, both exposed as lying, both fail in their delivery of promises, both expanded into overseas territories, both were tipped for stock market superstardom, one has been sued and fined for their practices, one is simply getting away with what they can while they can. Both saw dips in their share price near the end. I hope the writing is on the walls for PB - they certainly deserve a fate equal to their own ethics.
Wasn't Wonga founder Errol Damelin an early investor in Purplebricks too? Not sure if he's still backing them, but there's a lot of similarities in both firms as you've noted.
I'm sure the days of an agency being able to charge a high fee for just taking a few photos and listing a property on a website or two are close to coming to an end.
Yes,,thats all we do..
We dont hold the sellers hand for an average of 4 months.
They dont get £1000's of marketing spend
Just like tesla only put a few wheels on a piece of metal...
be quiet.
Perhaps growth isn't as the market expected?
If the market is one day thinking that the UK is growing revenue by 100% a year and that Australia and the USA are going to follow in the footsteps then any contradiction to that scenario is going to have a huge effect on the share price.
I can relate to that, the fact that Axel Springer recently paid £3.60p a share for 12% of the company is hard to reconcile with the SP decline.
Its becuase investers have worked out that £6million profit values a company at about £60 million not £600 million.
No matter how much of the world purplebricks fake expand into, they still have to spend the same on markting to break even ...ponzi scheme.
PB Good riddance to bad rubbish
Purplebricks is essentially a pyramid structure, it`s business model relies on ridiculous numbers of listings (sales don't matter) which if you do the sums would require the entire housing stock being traded in short number of years. The whole thing will never work and is simply a way of extracting investment from people/institutions who are either greedy/stupid or both. It simply doesn't work
Maybe the crowd are beginning to listen to the little boy laughing at the Emperors new clothes?
Deary me...
"Even analysts say, off the record, that it is difficult to give a specific single reason for the agency’s share price decline, which has accelerated in recent months."
If said analysts stopped burying their noses in figures and looked at the real world for a minute, it shouldn't come as a great revelation that a matter of losing public trust is playing a major part on PB's woes.
As we all know, in the world of advertising, there is no greater power than 'word of mouth'. In time, it builds brands and establishes household names. But it can also be Kryptonite to those who use shady business practices to dupe the public.
Yes indeed, 'word of mouth' is mighty Kung Fu but it takes time which many companies trying to make a quick buck don't have the patience for. But alas and alack for PB, that same 'word of mouth' has reached the point where it now beginning to steadily spread and it will eventually begin to spread like wildfire as they fan the winds of discontent themselves.
At this point, I wonder if the Powers That Be at PB look back and realise where they could have been by now if they had been more honest and transparent. Like a trusted household name in a position where nobody could pause a serious threat to them. Unfortunately, the wheels of time cannot be turned back.
And so it has come to pass that they are a household name but for all the wrong reasons and plummeting share prices reflect this. So we don't need analysts to tell us that PB is heading for collapse in 2019 unless radical changes are made. Problem being they may already be at the point of no return.
It can take years to build a good reputation but only months to ruin it. (Remember Ratner's et al)
As per usual, we will continue to hear outrageous claims about expansion and of how well they are doing. (All the usual signs of cover up) Then one morning out of the blue some folks will choke on their cornflakes as they hear the inevitable news as we did recently with Wonga.
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