Purplebricks’ eye-watering share price fall yesterday was greeted with widespread satisfaction by property professionals outside the online sector.
The agency’s share price went into freefall yesterday morning after it announced that its UK and US chief executives were leaving; that news came at the end of a profits warning trading statement preparing shareholders for bad news from Purplebricks’ Australian and US businesses, both of which were likely to earn less this year than expected.
At one point during yesterday's trading, Purplebricks had lost 38 per cent of its value; this recovered slightly later in the day but it still ended 24 per cent below its opening price.
Roland Head, an analyst writing the popular Motley Fool online financial column, wrote yesterday evening: “The company warns that UK sales growth is likely to slow to 15 to 20 per cent this year, compared to 80 per cent last year. Are sellers finding better deals elsewhere? In the US, the firm says it has recently moved to a pay-on-completion business model. This sounds to me like a standard no-sale, no-fee arrangement. I’d expect this to result in slower revenue growth … Neil Woodford’s funds own 27 per cent of Purplebricks, making him the group’s biggest shareholder. His shareholding is probably too big to sell without destroying the share price, so I guess he’ll have to remain patient and hope things improve.”
Earlier in the day Anthony Codling - who in his former role as an equity analyst at Jefferies investment consultancy had sharply criticised Purplebricks’ record - tweeted: “Big share price moves in estate agency sector, some might say ‘to lose one CEO may be regarded as a misfortune; to lose two looks like carelessness.”
Codling, now chief executive of yet-to-launch portal Rummage4, has a Twitter profile showing him chairing a debate involving Lee Wainwright, the Purplebricks chief executive for the UK who yesterday left his job with the hybrid agency.
Lettings guru David Lawrence, a respected consultant in the rental sector, tweeted to EAT editor Graham Norwood: “I’ve never been convinced that the likes of online estate agents would ever take off. Online lettings agent - yes. But estate agency - no. Too many barriers to good service for my liking.”
Anthony Hesse, founder of Property Personnel, tweeted an image of Purplebricks’ share price having plummeted 36 per cent in early trading and wrote: “Not a good start for the day for investors in Purplebricks.”
And Chris Wood of PDQ Estates in Cornwall, a long-time critic of Purplebricks, wrote on social media: “With liabilities to customers in perpetuity, should Purplebricks be considering whether they have the assets to continue trading?”
Meanwhile Paul Telford, chief executive of For Sale By Owner website Okaylah, issued a statement yesterday saying: “…the online sector continues to stutter with the low fixed fee causing an issue for the agents, and a wavering level of service deterring customers…”.
The irony, perhaps, is that Telford’s statement came via a public relations firm co-founded by Russell Quirk, the former chief executive of failed online agency Emoov.
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Wow, i'd almost gone a week with out seeing that RQ name. He just can't help himself?
Purplebricks have led the shake up of an iindustry lagging the times - much more will change going forward and with greater speed. We are probably at the end of estate agent change version 1.0
He who wields the knife rarely wears the crown to misquote Shakespeare.
There is a demand for low cost property agency and the internet facilitates free open access to data base material.
Sorry everyone, I disagree, Online is here to stay in a form as yet to be defined. The board,telephone and office form of house agency aimed at geographical brand domination on every high street is over for good.
He'll mend them.
There Adds on TV are very misleading to say the least.
Feel sorry for the guys who work for them and the clients who have paid for there services
I feel sorry for your English teacher their not there (twice) adverts doesn't have two 'd's' and why a capital a ?!
Hi Peter, I see the grammar police have arrived to score cheap points!
Pointless responses aside, you are absolutely correct. PB's adverts are very misleading.
There’s a difference between knowing your 5h1t and knowing you’re s**t ;)
Kenny Bruce's prediction of 20% market share in the Uk within 5 years seems like a huge over exaggeration. Seeing the share price plunge yesterday was no surprise. They blame their own staff for every complaint made and there customer care centre do the same. The company wont release their completion figures as it would ruin their proposition of everyone that pays up front with only a small percentage going on to completion. High street agencies are now starting to clean up. Not so many boards around now. There has clearly been huge arrogance at board level of predictions of new business. The US and Australia seem to have worked them out, it wont be long before the UK realise that the high street agent offers much better value for money. Treating staff like you have just wiped s... from your shoes....... How funny ! What a shame haha !
Lets now embrace the start of a massive decline of Purple Bricks and possible winding up.
How can they carry on with all this investment and five years later still make massive losses for shareholders.
Who would even know who they are without the advertising.
Lets see what happens and watch with excitement as Purple Bricks follows emoov and probably many more down the pan. Bet Neil Woodford is hoping to get out while he can.
First it was the building society's ending in countrywide buying out Nationwide's Estate agency arm for £1. Then we had the supermarkets try and fail miserably and now the onliners, their ten year experiment is failing rapidly. Until people realise that estate agency is a profession and far far more than just sticking a board up and an advert on rightmove there will always be someone else willing to lose a fortune thinking anyone can do this job. The future of estate agency isn't about high street or online its about the same things its always been about, people, communication and service. I spent ten years as a corporate agent, five years running a profitable company from a bedroom and now a managed office in a town location. It doesn't matter where you are based it matters that you understand the job and that you understand people. Purple bricks can survive but they need to be less hostile and superior in how they talk and act. They should re focus on what they do differently and try to engage with other agents and learn from the mistakes they have made. If they continue to act as though all other estate agents are somehow ripping sellers off they will end up alienating the very customers they seek to impress.
Like I've said Purplebricks in the USA is nearly finished. There's very little chance anyone had deep enough pockets to sustain a business plan there, too big and way to much competition and the Americans are too smart. In AUS they are shrewd too and the media are against them. They will blame the world economy and Michael Bruce will probably blame Brexit. In the UK they are burning through lpes at an amazing rate and they will stick around but nothing like 20% share as they predict. Poor Lee Wainwright is a great guy but he was toothless in that role. Paul Vickerstaff was constantly behind his back complaining to the Bruce's about him.
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