Open letter accuses OnTheMarket of ‘misleading shareholders’

OnTheMarket critic Brett Stone has issued a second open letter to shareholders of the portal, accusing it of “irresponsibly diluting shareholders” and making misleading statements.

The letter, posted on LinkedIn, highlights data from OTMs's recent stockmarket update that showed it is losing agency branches and has seen a reduction in site visits.

Without change and proper investment, Stone claims OTM will keep destroying value, keep “irresponsibly diluting shareholders,” keep losing estate agent customers, keep failing to prevent customers’ increasing spend on portals and keep making misleading statements.

Key points Stone makes within the letter include:
 
(1)   OnTheMarket is underinvesting in their products, teams and business handing an easy win to Rightmove and resulting in the loss of estate agent customers, fewer listings, less visits to their site, slowing revenue growth and a declining share price.

(2)   Since OnTheMarket listed in February 2018, shareholders have seen the value of their investment decline by two-thirds, customers have seen their aggregate property portal costs more than double, and the property commerce category in the United Kingdom has remained slow, inefficient and stressful for estate agents and consumers.

(3)   OnTheMarket are losing customers with 1,084 estate agent branches lost last year and more than expected being lost so far this year.  (Rightmove lost 178 branches last year as a comparison).  Portal visits are down 14% and revenue growth slowed in the second half to up £0.4 million or 2.4%.

(4)   OnTheMarket is irresponsibly diluting shareholders and granting options to insiders.  OnTheMarket issued 19.5 million new shares since IPO and has granted 13.2 million options.

(5)   OnTheMarket are making public statements which do not appear to be based in reality or supported by evidence  (examples of which are examined in an appendix to Brett Stone’s open letter) and do not appear to be acting in the best interests of customers, shareholders, or consumers.

He said OnTheMarket has rejected attempts made last October to have a discussion about an offer including “capital and digital market expertise” required to deliver returns for shareholders and products for customers at speed and scale.

Stone, founder of Trunkstone, a new long-term holding company focused on the property commerce category and the managing partner of private investment partnership Edengen, said in the letter to shareholders: “The proposal included a significant investment in new ordinary shares and was a win/win/win solution for shareholders, customers and employees.”

He said the proposal required shareholder approval at a general meeting, required no additional capital or commitment and retained OnTheMarket’s public listing.

It also protected customer’s interests through an “irevocable commitment to cap agents’ listings fees indefinitely” and included a pay rise for all employees to help with the impact of high inflation, Stone said.

A spokesperson for OTM said its response hasn’t changed since receiving the first letter in October. 

OTM said at the time:  “The board of OnTheMarket received a letter from Brett Stone in late 2022 and, after careful consideration, unanimously agreed his proposal was detrimental to stakeholders. 

“Stone is not a shareholder in OnTheMarket, did not provide any evidence of shareholder support for his proposal or any details of any available funding.

“The board consider that OnTheMarket has strong prospects as an independent business, as evidenced by our recent trading update which showed record revenues and profitability, alongside on-going strategic progress. 

“The board also place great value on OnTheMarket’s majority agent owned shareholder structure and believe that this continues to benefit all of the company’s stakeholders and the property market as a whole.”