Purplebricks’ share price has hit its lowest-ever level following the postponement of a trading statement after the company admitted a blunder costing millions to rectify.
By 10am, two hours after trading began yesterday morning, the share price fell to only 24.86p - this was its lowest point of the day and represented a 20 per cent-plus collapse.
It also meant that Purplebricks’ share price had tumbled over 71 per cent in six months and was almost 76 per cent down on the highest it had reached earlier in 2021.
Even more remarkably, the figure was over 83 per cent down on the agency’s all-time high of just under 500p in July 2017.
The collapsing share price, which closed at exactly 25p, means the firm's market capitalisation is now down to around £77m.
The agency, by its own calculation, is facing a pay out of up to £9m because of a long-term blunder on the processing of tenants’ deposits - reportedly exposing thousands of landlord clients open to possible action themselves.
The Financial Times calculates that as many as 11,000 current and former tenants using Purplebricks could be affected. It quotes Sam Cullen, an analyst at Peel Hunt, as saying: “The deposits were put into the correct schemes, the tenants just weren’t notified in the correct way. While the regulations weren’t strictly adhered to, the tenant wasn’t put at a disadvantage and, because you don’t have a load of tenants who have lost, say, £500, it’s unlikely we will have a load of aggrieved tenants mobilising."
The Daily Telegraph, quoting an unnamed source, is suggesting that payout could eventually be as high as £30m.
The latest statement from Purplebricks, issued just ahead of its latest share price collapse, says: “During an internal review the Company recently became aware of a process issue in how it has been communicating with tenants on behalf of its landlords in relation to deposit registrations. Further enquiries into this matter are currently being conducted and the communications process is now being corrected.
“In light of the above, the Company believes that it is prudent to provide for any potential future claims which could arise under the Housing Act in relation to this regulatory process issue. Early provisional estimates by the Company suggest a potential financial risk in the range of £2m-9m.
“Purplebricks is now in the process of finalising the level of provision required and associated disclosures and has therefore taken the decision to delay its results for the half year ended 31 October 2021 which were due to be published on 14 December 2021.”
In recent weeks the agency has lost at least two senior executives, issued a profits warning, plateaued in terms of market share, and faced a threat of a class action over the employment rights of workers who have now left the company.