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.