Zoopla shares fell yesterday despite delivering strong results to its shareholders and giving them reassurance that it did not regard the launch of OnTheMarket on January 26 as more than a passing threat.
Although the shares initially went up 3%, the collapse set in as the day went on, with the shares plunging so much at one stage that estate agents who had bought at a 20% discount on the initial offer price of 220p saw their saving more than wiped out as the shares fell to 170p.
But the shares recovered to finish the day at 181.50p, down 11.40p (6%) on the day.
Rightmove shares – which had enjoyed a good week – also had a bad day, ending at 2,239.50p, a fall of 79p (3.4%).
There was some mystery as to the reason for the Zoopla fall and the extent of it after such confident results.
However, there was a conference between Zoopla with analysts mid-morning, and one later said there had been “some incremental negative takeaways from the call”.
The analyst, William Packer of Exane BNP Paribas, did not explain what these were.
At the conference, Chesterman told analysts that Zoopla has seen no discernible increase in churn ahead of the OnTheMarket launch.
Chesterman said: “What we do know is what it takes to be successful in this space.
“You need to have a whole-of-market inventory, which the leading portals have. You need to have a world-class platform with a very rich feature set, which we’ve invested tens of millions of pounds over multiple years in developing.
“And you need to have a huge consumer audience – in our case over 45 million visits per month, in order to deliver value to customers and make it worth their while advertising.
“We think that’s a challenging proposition for Agents’ Mutual along with any other entrant.”
Chesterman also told analysts that the new competitor could damage agents’ relationships with their customers, saying: “A proposition like Agents’ Mutual, which contains restrictive marketing rules and prevents an agent doing the best possible job that they can do for a consumer, is only going to serve to alienate consumers from those agents that sign up to Agents’ Mutual, and those agents are going to suffer as a result.”
But an unconvinced Packer said that despite yesterday’s positive results, the “bear case is broadly unchanged” with Zoopla being more exposed – as the number two portal player – to Agents’ Mutual.
The broker also noted that the “vast majority”of estate agency customers are on rolling one-month contracts with Zoopla.
His note advised that Exane has a “clear preference for Rightmove over Zoopla”.
It advised investors to “continue to avoid Zoopla heading into the Agents’ Mutual launch”.
A second broker, Citi, said Zoopla’s results were “solid” but said that as long as Agents’ Mutual remained an unknown quantity, Zoopla’s shares would struggle to perform.
Citi said that “time will tell”.
Agents’ Mutual issued its own response to Zoopla’s results – taking Rightmove into its sights as well.
Ian Springett, chief executive, said: “It is our belief that Rightmove and Zoopla have failed to acknowledge the strength of the dissatisfaction felt by many estate and letting agents over the existing portal market duopoly.
“This is evidenced by the fact that thousands of agents have already signed up to switch from them and use the new portal when it launches on January 26.
“From this date, neither Rightmove nor Zoopla will be able to claim they cover the entire market because many estate and letting agents will be leaving them to join OnTheMarket which will create a unique set of listings.
“In order for what is a new start-up to become established, our member agents commit to list with us and just one other competing portal.
“This is likely to lead to the existing two major portals losing significant advertising business as OnTheMarket grows over the coming years.
“OnTheMarket is a mutual organisation with a mission to provide a first-class service to member agents, to their clients and to the broad property-seeking public.
“We’ll be injecting much-needed competition to the marketplace and we’ll be providing consumers with a state-of-the-art search experience.”
Comments (23)
Some great comments here. What is also telling is the fact that both RM & Z have this week emailed surveys asking us about how WE as agents (their bread & butter) view THEM. Worried ? I should think so. Should have thought about that before whacking up our fees again this month. No doubt the duopoly filled a pre-existing void and, by using our own raw material, have driven business to us. But their flawed business structure (joint-stock company) meant they were always going to have to play vampire in order to keep their blood-sucking shareholders happy. The most unforgivable in my view is the fact that RM continued to rack up its fees during the darkest recession in living memory. Roll on January and OTM ! Ian Springett couldn't have put it better: good for agents, their clients and the public at large. Fence-sitters: time to get off the fence and make a decision 😉
In the ongoing defence against rising membership costs, we really need a united front to highlight that significant volumes of the 'views' are agents investigating their market and touting. The following is not 100% indicative of a genuine readership. Somebody should nudge the industry soap boxers Ed Mead/Springett/Pryor and any others you can think of.
Here's a point to mull over Mr Chesterman… You keep dancin to the tune of your shareholders and the stock market, after all, they are ultimately your bosses! OTM will get on with serving their clients, estate agents, homesellers, homebuyers… however NO shareholders, NO stockmarket! Waffle all you wish about state of the art/cutting edge etc etc Mr Waffleman but do remember this… your business is viewed online because we the estate agents place our clients property there… for many estate agents – no longer, for RM – no longer… Do you seriously think that we have to place our business on every single portal to best serve our clients?… wake up and smell the winds of change. My business is in OTM for the long haul and be assured every fibre of my being will be ensuring that clients are re-educated where to look for property online and that marketing comes free of charge. Both your company and RM thought you were dealing with dribbling gulible monkeys… and you were… but just in time OTM arrived and slapped us about the head… remember all we want as PART OF OUR BUSINESS is an Online Shop Window… Welcome aboard OTM… I look forward to using your services from 26/01/15. You keep dancin' to the old stockmarket juke box Mr Chesterman and we'll keep promoting OnTheMarket.com
GPL Couldn't haver put it better. What infuriates me about those anti OTM and sitting on the fence is this, what actually does RM & Z do that is different to OTM that we and the public need? Answer NOTHING. For a business's that are raking in £m's I am not seeing the return. If I can get the same exposure from another source that will listen to its customers and cost effective and where those customers will be redirecting the public to in 2016 its a no brainer. And thank you RM for the last quarter round-up report, one of the best ammunition you could have given me to show my customers why all your hype is not effective and to switch to the OTM is in their best interest without having to take my word for it.
Its not what they do different its what they have thats different and that's market share. RM in constantly in the top 9 of websites viewed in the UK. Yes we all want OTM to work but it will take herculean marketing to become the number one portal.
But why do they have that SP? Its because the majority of houses for sale and to let are listed on it. There is no other reason. They don't have a captive market of secret buyers, they are merely the shop windows of a town agents combined. Remove the stock and they are no longer that and then someone else's portal is the agents of a town's shop windows combined. OTM, simple really.
OTM can only succeed with £millions and millions invested in marketing, not just an initial splash, but ongoing national outdoor/TV/Radio/Cinema…and it costs a lot. Plus historical advantages of SEO, adwords etc…guys it is not a case of build it and they will come. That as a barrier to entry is why the City is generally underwhelmed about OTM and its chances of success…
It is simple but getting the majority of agents in the UK to do this is the hard bit. Ever tried arranging a curry for 10 people on a night out to agree times and places – now try and get circa 20,000 agents to drop RM that's the hard bit!
I wouldn't underestimate the power of the actual "product placement" in the sense that as stock moves across, agents promote & market the brand themselves and OnTheMarket.com promote the brand, combined exposure on that breadth/scale will spread brand awareness. I have 2 branches in key High Street positions that are effectively Free Billboards for OnTheMarket.com Both sit at major town centre traffic light junctions amidst busy thoroughfares… that is local advertising that OnTheMarket.com doesn't have to pay one single penny for! I think that the brand awareness will grow… and after all, RM didn't arrive as No1 Portal. Already the Duopoly have no 100% market coverage and that will diminish over time. So, this giant Boogie Man of Biggest Portal etc tries to sweep aside one vital point… you can promote as much as you like however if you have NO or Little Product you will most certainly fail. Which begs the question, why would estate agents themselves not seek to promote and join OnTheMarket.com as they will reap the rewards as that Brand/Portal grows and they can jettison other portals?… Does any estate agent in the UK want to be on several websites? … if they could just be on one! Does John Lewis market their goods/products thru other retailers?… not that I am aware of… they use their stores and their website. The one single thing that estate agents can do in the UK is to stop getting sucked in by Portal Website Sales People and the Duopoly that we must use their Online Shop Windows?…. by all means, compete with each other, however get real, wake up, do yourself and your business a favour…. move across to OnTheMarket.com wholly or partly and as it grows the stranglehold will be broken as agents and the OnTheMarket.com brand grow to a scale that allows you to run just 1 portal! That process has begun and it simply requires fellow professionals to agree Mutually To use/support OnTheMarket.com
On your point re. John Lewis, no they do not sell their products through other retailers, but they do advertise through and pay mainstream press (all part of Plc's) , and not set up their own newspaper or TV channel. And on your other point – "you can promote as much as you like however if you have NO or Little Product you will most certainly fail" – that is why OTM is up against it because they will have a minority of listings as well as shallower pockets for marketing. I can't see stickers in shop windows being a compelling 'tipping point' in terms of driving public awareness. So, remaining on the fence is my strategy.
But there is a fundamental difference truthbetold and that is John Lewis are selling product. The same product you can get from Amazon, or any one of hundreds of retailers. So they advertise and need traffic to ensure that you buy from them. We don't need that, RM or Z don't sell houses, they pass on the leads generated by having the stock of property from an area on their website. Buyers certainly in the south are not checking RM for months at a time or even every day regardless of when they want to move. Our mailing list changes it's complexion every two/three weeks. So provided enough agents in my area are on it, the buyers will go there (about 85% of moves are local here, so most of the agents advertising OTM is enough for most of the buyers to be aware of it straight away). If not I have the leads from RM for now, I don't need the leads from Z and for that matter I don't even really need them short term from OTM, but give it 3 years and I suspect I can then just take them from OTM which is why I am paying to support it now.
truthbetold… No issue with anyone sitting on the fence, in the sense that they have to select the strategy that they think best suits their business. If your finances don't allow you to support OnTheMarket.com as well as other portals then you will potentially benefit from the agents who have got on board now with a view to launching/growing OnTheMarket.com …however OnTheMarket.com are NOT up against anything?… it is a win/win situation, every property that moves exclusively there proves that The Duopoly do NOT have the whole of the market, whilst every agent that moves exclusively there proves that The Duopoly do NOT have the whole of the market and as each week/month/year goes by The Duopoly market share reduces. Anyone who thinks local marketing from established high street agents will not help promote OnTheMarket.com is at best misguided… once again…The Duopoly is only an Online Shop Window, only part of our marketing… and someone enlighten me as to why The Duopoly are constantly bombarding agents with marketing material for their brand?….. don't kid yourself… OnTheMarket.com has left the station on a challenging journey however we start with substantial support from estate agents who are committed to change! RM/Zoop and another main portal in West of Scotland have all approached agents with revised deals/incentives to retain agents business… what does that tell you?… they never had to bother before! The Portal World is changing and I can congratulate our firm and many, many others making the financial commitment to help launch OnTheMarket.com, hopefully for the benefit of all professional estate agents and the long terms prospects of our business…. which we almost handed over to a 3rd Party – The Duopoly!
No one actually knows. Markets do not like the unknown and volatility in a sector. I'm sure RM/zoopla will be effected a little short term, but long term no. I think it is a great time to buy Zoopla shares, as overtime they will I'm confident, go up.
And you will underwrite any share losses against your monumentally questionable statement "as over time they (Zoopla shares) will, I'm confident, go up"… wow! Can I see your professional qualifications to suggest one should just open the cheque book and crack on with Zoop share investment? Hmmmn? My view… "the earth will explode eventually… it's a good time to buy a house on another planet as over time it will, I'm confident, most likely, go up in price!" 😉
I think thats a "no" GPL.
lol…me thinks The Sound of Silence 😉
The real impact on the portals is yet to show, as we discussed yesterday many agents I have spoken to, know they are giving notice, just haven't yet. They are however signed up to OTM. Its more than likely that any city analysts will be reading comments on publications such as this, I would be if I were them, and will know that, contrary to what was being levied previously that this site is the pro OTM site, it is in fact merely a reflection of the general widespread support for OTM. Some will subscribe immediately, some later, but provided the initial support from enough agents is there, then I believe that the disruption to Z and to an initial lesser degree RM, will be huge across 2015.
Complaceny will not win the day. The share price has stabilised and for those who dont follow the markets, a few snippets, as all need to look over the fence to assess the enemy and urge your senior management and other agents to unite as divided, On the Market will be still born. Revenue increased 24% to £80.2m profit increased 2% to £28.5m, membership increased 5% to 19663 so they still have formidable resources, words are not enough. What is telling to me is the following statement: "The launch of another new portal, Agents' Mutual, in January may have some short-term impact on our agency membership numbers but we have seen numerous launches into our market before and taken effective action to compete with them"
I have done research and there are shorters of the Rightmove stock in the background and they are there only because they believe there are further threats to their revenue. However this will not be enough , as if the launch of OTM in January is a damp squib, in terms of life expectancy of any tech investment is short lived, and the fittest will survibe and thrive. OTm will be launching in a challenging market and of the conversations I have had with agents, the big boys are saying they are in, the vast majority of smaller businesses are fence sitting, some for up to 6 months and there is a huge divide between whether it is Z or RM that get the vote. Most seems to hinge on whether you are in London/south east (Z Primelocation) or rest of the country RM. The choice is yours, just make it stick.
“You need to have a whole-of-market inventory, which the leading portals have. You need to have a world-class platform with a very rich feature set, which we’ve invested tens of millions of pounds over multiple years in developing.
“And you need to have a huge consumer audience – in our case over 45 million visits per month, in order to deliver value to customers and make it worth their while advertising…"
What he fails to mention is , you can have the slickest, most feature rich portal out there, but without properties to list you where will the traffic come from?
we’ve invested?
Chesterman needs to learn that professional agents sell and rent property, not portals. Portals are a good advertising medium, but shouldn't get delusions of grandeur. We used to get the occasional landlord who comments "oh there's nothing to it, you just stick an advert in Loot". There is MUCH, MUCH MORE!!!
Many agents did pitch RM and Z as their main offering. Trouble was that the next agent pitched the same but was cheaper. Cheaper as RM and Z have allowed cheaper models in. But lets hope agents are learning again to value themselves higher than the places that merely provide their online window. Agency should be about agents. Portals have become just very expensive 'click rather than brick' windows………..It takes agents to fill the windows. Some might say RM and Z should be paying agents for listing
Chesterman/Zoopla can only keep the bluff for so long – at some point in the very near future the city are going to realise the REAL damage that is going to be caused to Zooplas and rightmoves revenues.
And hold your hats when that happens.