Purplebricks has this morning said that a newspaper report over the weekend, claiming part of the business is to be sold off, is not true.
A statement says: “The article that appeared in the Telegraph this weekend regarding Purplebricks’ plans to sell our lettings business is not true. Lettings is a crucial part of our growth ambitions at Purplebricks and we will continue to invest in this part of our business as we move into 2022 and beyond”.
The Daily Telegraph had reported that the lettings division was being assessed for a possible sale - until this morning, the company did not dispute the speculation, which first appeared 72 hours ago.
Rumours about the company have swirled since its half year trading figures, scheduled to be released on December 14, were pulled just a day before. A company spokesperson told Estate Agent Today between Christmas and New Year: “No date has been confirmed yet.”
Meanwhile its share price hit another record low during the trading period between Christmas and New Year, falling to a price of just 23.10p on Wednesday December 29. Four and a half years ago it was around 500.00p.
This collapse in value has prompted a series of negative press comments in recent days, mostly expressing pity for patient shareholders in the firm.
“How did Purplebricks get it so wrong?” was the headline of an Investors Chronicle article shortly before Christmas. Referring to the recent revamp of its pricing policy, moving away in some cases from reliance on upfront fees, the IC warns: “It’s long past time the company backed up bullish noises with proper execution.”
The Daily Telegraph, again just before Christmas, wrote: “We’ll stick to investing and leave Purplebricks to speculators - avoid.” It added: “There is a vast difference between investing and speculating. The former requires a detailed assessment of the strengths and weaknesses of an investment opportunity to determine that it has a high chance of success. By contrast, the latter relies largely on chance or good fortune to generate a profit….”
And this month’s UK Investor magazine, casting its eye back to Purplebricks’ launch on the London Stock Exchange just over six years ago, accuses the agency of floating “at an inflated valuation."
Shareholders aside, the company faces multiple problems as it enters 2022.
It has by its own account a lettings liability of some £9m for its failure to abide by lettings deposit laws, and a class action by former Local Property Experts disputing their employment rights could potentially cost the company £10m to £20m.
Despite a top-of-the-class 4.6 per cent market share and despite obtaining an estimated £400m-plus investment since its launch, it appears to be in dire straits financially.
The Investors Chronicle says that even before the hits as a result of the lettings and employment issues “consensus forecasts are for a pre-tax loss of £8m for the year to April 2022. Two years later, annual profits are only expected to reach £3.1m. Among both investors and analysts, faith in executives’ ability to deliver is draining.”