Purplebricks’ share price dipped below the psychologically-important 200p level yesterday as the hybrid agency’s longer-term slide continues.
In the summer of 2017 the agency’s spectacular popularity amongst investors saw its price hit around 500p; however, in the past year the price has fallen around 40 per cent, and in the past month alone it has lost some 12 per cent.
Early yesterday afternoon the price dropped to 195.30.
Although the agency’s share price remains almost 60 per cent up over its level in October 2016, the past year’s slide has coincided with ambitious international spending plans outlined by Purplebricks.
Over the summer it emerged Purplebricks had reshaped its packages and pricing in Australia with the Australian Financial Review alleging some increases were as much as 13 per cent, at a time when the housing market down under is in poor shape.
In July Purplebricks acquired another fixed-fee agency for £29.3m - this was the Canadian DuProprio/ComFree which carried around 39,000 property listings in 2017.
In September the agency revealed it was expanding further in the US, launching into two market areas within Florida. This follows its longer-standing involvement in California, New Jersey, New York, Connecticut, Arizona and Nevada.
Earlier this month it announced a new joint partnership with Axel Springer called NewCo in order to take a 26 per cent stake in German online agency Homeday, with a possibility it could raise its involvement to 50 per cent in 2019.
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Expanding too quickly in an ill-prepared manner is never a good idea.
Indeed. Running before you can crawl springs to mind!
Why the need for all the international expansion when PB still hasn't made a total success of its UK operations? Yes, it can point to its brand recognition and considerable growth, but it still proves highly divisive.
I don't think even its most ardent critics could deny its impact in recent years - boards are everywhere you look, across the country, and the TV adverts have helped them to enter the national consciousness in a way few estate agents do - but doubts still remain about the business model and how successful the company actually is at the bread and butter of agency.
Still massively overvalued on any normal P/E ratio.
I don't think they will have much of a profit base once they have burned through all the investors money.
A slow motion train crash IMO.
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