Analysts at investment bank UBS have slashed Purplebricks’ share price target from 285p to 100p – the price at which Purplebricks launched in December 2015.
UBS also said Purplebricks might have to embark on another round of fundraising to bring in £100m.
The bank has specifically raised concerns about Purplebricks’ performance in Australia and America.
Purplebricks itself warned that it is performing behind expectations in both markets.
Earlier this year it downgraded its global revenue expectations for this year by £35m, and parted company with both its UK and US bosses, parachuting co-founder Kenny Bruce back into Britain.
In response to Purplebricks’ warnings in late February, £100m was wiped off its market value, with shares plunging almost 8% in a day.
In its new report, UBS said that Purplebricks Australia was expected to break even at the end of 2022, three years later than originally expected. Its US business might not break even until 2025.
UBS analysts said: “Operations in Australia and the US are characterised by having very limited visibility on the business’s development and break-even horizon – Australia keeps being postponed and losses in the UK are expected to worsen.”
They also said that changes to Purplebricks’ pricing structure in both Australia and the US “raised concerns about the future of online agents and the upfront fee model”.
The UBS report also notes that in the UK “momentum has worsened, market share gains have slowed and risks are skewed to the downside”.
UBS is forecasting revenues in Australia of £26m in 2020, but a pre-tax EBITDA loss of £12m.
UBS said that to fund these losses, Purplebricks is likely to have to raise £100m capital in the next financial year.
UBS’s report follows warnings from investment bank Berenberg that Purplebricks might have to get out of the Australian and US markets, for its business to survive in the UK.
Last month, Berenberg slashed Purplebricks from ‘buy’ to ‘sell’ and cut its target price for the shares from 470p to 80p.
Yesterday, Purplebricks shares were seemingly unaffected by the UBS report: its shares bobbed up about 3% during day, finishing at around 137p. They were as low as 118p about a fortnight ago – a long way from their high of 511p in August 2017.
Comments (55)
PB closing Australia. Michael Bruce stepping down and vic Darby replacing. Review of USA to take place next month….
It will remain in UK regardless but no doubt cut people to ensure there is enough work for it’s people.
Mark my words.
Cue more insights from “Call me “Prophet Sdaltaf”” 😉
Anyone seen this Sdaltaf101 poster on here before? Anyone else fathom what on earth he’s going on about?
What we are seeing is only the first stage of the true disrupters, you think the recent failures will continue but you are wrong, they were the scouts testing the market and now the army is coming over the hill with their big , ignore them at your peril.
Eh? Seriously, eh?
Thank you Property Pundit for eligently demonstrating my “dead wood” analogy.
Yep, still Eh?
Look forward to seeing your future contributions on here. They’re priceless.
Ref:
If PB are going to focus on UK high st – why not just buy Countrywide and their market share?
– I would suggest they are waiting for the administrators so they can pick over the carcass and see what bargains are on offer, but I think they will do something radical rather than rebranding an office front and taken on the liability of demotivated staff, the good staff have already left for new challenges so whats left is the dead wood and it takes time, effort and resources to motivate dead wood.
And at what point does PB raise its fee’s to cover its High Street overheads? Oh yea the consumer is going to love that …. whats that ……. “Commissery”
You live on another planet if you think they can do it without raising fee’s.
Once the high street has been decimated then the prices will increase. A disrupter manipulates the market by reducing the price to remove competition, increase market share and maintain dominance. Have you heard of Amazon?, they started by selling books as a market disrupter.
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
Sdaltaf101 = Russell Quirk
Hi Russell!
I don’t think so…. I thought i was Mike Delprete 🙂
We don’t know who you are but you are without doubt the best comedian on here. Can you post every Friday to lighten the weekend for us all?
Thank you Property Pundit that’s so sweet,
I’m a big believer with care in the community but i don’t think I can commit to one day a week, when I’m not working I could pop back and sprinkle the knowledge but I cant promise although it has been fun, similar feeling to those Victorians who paid to walk around Bedlam.
And don’t forget, you are a fantastic ambassador for your competitors so don’t let anyone put you down, keep up the good work and keep your head in the sand and your bum as a target 🙂
Well this is interesting, one of my posts has had the spelling altered on 2 words…. So whoever this is has access to the back end of PIE.
Call me “Prophet Sdaltaf” and I see a disrupter on the high street, and the colour is Purple.
For Property Pundit and Woodentop, a Prophet is a person who can see the future and not to be confused with the word “profit” which is something you will struggle to achieve when the disrupters arrive on the high street.
Have a nice day and don’t forget to empty the bins and clean the cups before you leave.
In the manner of the great Clinton Baptiste, I’m getting the words; ‘Snake oil Salesman’
And in the words of the formidable Senator Chuck Grassley (R – IA); ‘the jig is up’
It is inevitable CWD will collapse unless they change their board which is highly unlikely and PB followed by Yopa will enter the high street to compete against the pay nothing now and I’ll take a few pictures, write a description and list you on Rightmove in return for a percentage of your property, this model is doomed to fail. Those quality agents who refuse to complete on price whilst offering additional USP’s to enrich the clients experience will flourish but the majority will be intimidated and will attempted to compete on price with a pay on completion for £1000 and its those who will fail.
If only the independents realised they are feeding the beast which has encouraged the hybrid model who is Rightmove / Zoopla, if you honestly believe potential buyers only visit these portals you are mistaken, the tyre kickers yes but serious buyers will research and keep a keen eye on an selected location where they want to live, providing your property is displayed on the first two pages of Google and Bing any serious buyer will find you and don’t forget the most powerful marketing tool is the For Sale board. An alliance with OTM was the perfect solution but you all failed to take the opportunity so they need to gain the support of the independents and offer a realistic monthly fee of say £200 for 50 listings providing you only list with them; as a united force you begin to command the portal listing fees and control who is eligible to list, this was originally proposed but the green eyed monsters ridiculed the business model and you continued to feed the likes of Rightmove and Zoopla who is encouraging the demise of the industry by supporting the likes of Doorsteps and 99Homes.
Seems you really don’t know the detail. PB will never enter the High Street, period. Just ask yourself why PB are NOT on the High Street, NOW!!!!!
Thank you Woodentop.
I was unaware YOPA where on the high street, could you tell me where?
Yes they will, 100% Guarenteed.
Woodentop you have edited your comments, you said YOPA were already on the hight street and now you have removed it, you should have also remove your wisecrack: “Seems you really don’t know the detail”
Who are the shareholders of YOPA? I knew it would be to much for you to understand, as your knowledge seems to be a bit of this and that and come up with 2+2 = 5.
Now answer my previous question: At what point Sdaltaf101 would you consider a company is a failure?
That is a very relevant question in response to your statements, for after 7 years and meggar £m’s spent and £m’s lost and the big boys in the city who have no stake in PB are saying fail, fail, fail, loss, loss, loss and continuing £m’s losses for years to follow, and share price to fall … wiping out any investor left, who joined at the beginning, from a capital profit and later investors well and truly stuffed.
AND the housing market is dwindling so PB and the like who have fixed costs unable to weather the storm, while as AgentV commented, the independents (note spelling) are likely to be the winners, as history has proven for decades.
Shouldn’t you be licking stamps or making coffee for clients and let the adults speak, you think YOPA is on the high street.
Sdaltaf101 makes some valid points although I disgaree strongly with his last comment about small indpendents being forced out of the market There is always a place for the small independent to flourish especially now
More ;likely someone like CWD the brands will be breaking up into component parts and the merry dance starts again. Should imagine the canny partners at BTW Shiells in Belfast are just priming themselves up for their third crack of the whip
The reality is Purple Bricks are here to stay, raising £100 million is pocket change for the caliber of investors who have already committed, once your business is listed then the business itself doesn’t have to earn money, its the movement in the share price which attract investors and that’s where the real money is earned (and lost), it wasn’t too long ago they were valued at £1.1billion and now as an online business with very little tangible assets they are still valued at four times larger than Countrywide with only 4-5% market share.
It is inevitable they will pull out of the US and Australia, both models continue to change and offer nothing different to their competitors and the housing bubble in Australia has burst. Their next move will be focused on the UK high street with a hub type concept championing the online pricing model, they need to increase their market share to 20% and the only way this will happen is by moving to the high street. The high street will respond by lowering their fees to compete and the inevitable collapse of the sector will begin as the small independents are forced from the market.
Long time since I read such twaddle on ANY internet forum. Let’s talk again in December, deal?
Are you Mike Delprete?. Honestly, your analysis made me laugh out loud. About as much use as a fantasy Trustpilot review.
I tend to think you are correct in that PB will be around in the UK in some form for a while yet. The majority of small independents however will be fine it is the big to medium size companies with high fixed costs that will struggle as we are seeing with LSL and Countrywide.
Sdaltaf101
1. So, if I am an investor looking to make money by trading the shares – why would I give PB £100m ?
2. Do you believe Axel Springer are going to invest further without a radical cull of existing management ?
3. If PB are going to focus on UK high st – why not just buy Countrywide and their market share?
4. The High Street is full of independents – people who used to work for the likes of CW but do a better job.
So, if I am an investor looking to make money by trading the shares – why would I give PB £100m ?
– You ask two questions, firstly if you a speculative trader you invest on the short term, sell high buy low to generate a return on your investment. Why would you give PB £100m, because its a sound business model currently valued at 4 x investment with huge potential to disrupt the market.
Do you believe Axel Springer are going to invest further without a radical cull of existing management ?
– Yes the management appear to have the full support but i’m not on the board so this is only my opinion, also they don’t need Axel Springer’s money, they have several options to raise money.
If PB are going to focus on UK high st – why not just buy Countrywide and their market share?
– I would suggest they are waiting for the administrators so they can pick over the carcass and see what bargains are on offer, but I think they will do something radical rather than rebranding an office front and taken on the liability of demotivated staff, the good staff have already left for new challenges so whats left with is the dead wood and it takes time, effort and resources to motivate dead wood.
The High Street is full of independents – people who used to work for the likes of CW but do a better job.
– I agree but ask anyone in the UK who are PB, Yopa and HouseSimple, everyone knows who they are and what they stand for, they are established brands and they will use this to their advantage. An example would be Sports Direct, who was Sports Direct before they bought Newcastle United, now they are everywhere.
1. No, it’s one question – you implied that investors putting £100m into PB would make money on share price movement(hence my query).
Personally, I don’t agree that PB is a sound business model.
2. If, as you claim, “it is inevitable they will pull out of the US and Australia” then that is a significant management failure. No sane investor would throw good money into PB without some changes at the top.
3. CW are still making profit – with a business model that is more likely to succeed than PB.
4. PB,Yopa and HS are burning cash at an alarming rate – the latter two need more money now and PB will need more in December. They are brands in the sense that they spend a fortune on TV advertising – without it they shrivel and die.
1. No, it’s one question – you implied that investors putting £100m into PB would make money on share price movement(hence my query).Personally,
I don’t agree that PB is a sound business model.
– Purple Bricks is a sound business model with huge potential, their strategy is to weaken the market and remove the nationals which is currently underway and then focus on the independents which will be fought on the high street, in my opinion.
2. If, as you claim, “it is inevitable they will pull out of the US and Australia” then that is a significant management failure. No sane investor would throw good money into PB without some changes at the top.
– Not everything you touch is Gold!, making errors is all part of running a business and they will accept defeat and refocus on the UK with a revised business model, what they will not do is continue with a failed strategy like CWD are doing and continues to do so, they have just touched the 0.06p, would you buy CWD’shares at 0.06p or PB, the sensible money will be PB.
3. CW are still making profit – with a business model that is more likely to succeed than PB.
– You need to inform the London Stock Exchange as they show a pre-tax loss of £463million for 2016-18
4. PB,Yopa and HS are burning cash at an alarming rate – the latter two need more money now and PB will need more in December. They are brands in the sense that they spend a fortune on TV advertising – without it they shrivel and die.
– Yes they are burning cash, with the most sensible being House Simple with their 6 months free listing strategy, they also have huge financial reserves and influencing investors who are more than happy to burn money establishing a brand. What we are seeing is only the first stage of the true disrupters, you think the recent failures will continue but you are wrong, they were the scouts testing the market and now the army is coming over the hill with their big guns, ignore them at your peril.
Purple Bricks is a sound business model with huge potential, their strategy is to weaken the market and remove the nationals which is currently underway and then focus on the independents which will be fought on the high street, in my opinion …
7 Years and still failing, failing, failing, losing money, losing money, losing money. Now downgraded by many respected investment banks as a Liability for investors? with continuing meggar £m’s losses to come (this includes the UK).
As the share price was in the beginning “a new boy on the block” to gamble on, the horse left the stable a year ago with no jockey and the chances of the horse coming back, well lets say its about to fall off the cliff.
At what point Sdaltaf101 would you consider a company is a failure?
1. We disagree – time will tell.
2. “they will accept defeat and refocus on the UK with a revised business model“. You claimed in 1. “Purple Bricks is a sound business model“.
3. CW are currently trading profitably, after a disastrous attempt to move away from a sound business model.
4. “the most sensible being House Simple with their 6 months free listing strategy” We will see who is right in the next 6 months.
1. We disagree – time will tell.
– Agreed
2. “they will accept defeat and refocus on the UK with a revised business model“. You claimed in 1. “Purple Bricks is a sound business model“.
– They are a sound business model with huge financial resources and look at the size of the potential market….95% which is still old school independents selling on a pay later and give us a percentage of your property and we list you on Rightmove….. Their model will continue to evolve as they have demonstrated in the US and Australia and they will enter the high street to compete against the independents.
3. CW are currently trading profitably, after a disastrous attempt to move away from a sound business model.
– Agreed to Disagree, the administrators will be appointed within 6 months
4. “the most sensible being House Simple with their 6 months free listing strategy” We will see who is right in the next 6 months.
– The For Sale board is the most powerful marketing tool to create brand recognition but we will see how many of the homeowners maintain their loyalty after the 6 months free listing period ends if their property remains unsold.
But not if the small independents put things in place first!
What things???You need a portal who is commited to Indipendants and will only support the Indipendatnts at realistic monthly fees, but that would need a commitment from the Indipendant and thats where the idea stumbles.
“Independents”
Where is the Duck?
He’s off playing with his proxy. I don’t think that’s a euphemism.
Cyberduck sold his shares in Bricks sometime ago. From his personal experience he is generally unimpressed with agents full stop and thinks Bricks are no better or worse than others .If you read his posts on LSE he is very lukewarm about Bricks prospects
It’s a shame that no agent in his patch has reached out and demonstrated that they can add value to a transaction which they surely can?
Hillofwad71,
There’s little point in trying to explain. I have no emotional attachment to any of my investments and like you say I sold my shares a long time back because I thought the market had got overexcited by their prospects.
As for the USA, it was always going to be tough. I said as much when they launched https://www.propertyindustryeye.com/eye-newsflash-purplebricks-is-launching-in-america-today/ “Good luck to them. I can’t see it working out but you’ve got to admire them for trying”
I still hope it works out for them. There will of course be many on here who rejoice if it doesn’t which is a bit sad.
UBS downgrade them saying they need to raise £100m from investors, which investor is going to be that nuts? The US market will lose £53m over the next year and continue to lose money for the next 6 years!!!!
UBS say “losses in the US are expected to worsen”. UBS is also concerned that the UK’s housing market is experiencing tough conditions at the moment, claiming that Purplebricks’ operation has lost momentum and that its market share grab has slowed, as if we didn’t already know.
PB have made a loss every year since 2012 in the UK and Australia and USA. Wake up call time for investors, there is a distinct pattern of failure. Never been a more classic case of bad investment.
How much have they now spent £300m? and not a penny in return for investors.
Purple Bricks are going the pan sooner than expected.
It’s all a numbers game for them, they need to raise another £100m wow!! Then what? Investors cant be that stupid can they?
‘Oh clearly they can!’…..
They think they have found their Purple Unicorn and are reluctant to admit it’s a Dead Duck !
No, no, ‘e’s uh,…he’s resting.
No no he’s not dead, he’s, he’s restin’! Remarkable bird, the Solihull mauve, idn’it, ay? Beautiful plumage!
Just waiting for the towel to land and then we can finally be rid of this company that has cheapened and sullied every thing that decent full service Estate Agents stand for.
It is only a matter time now…..
Hit the PB Google ads on Google to speed that process.
When they do drop off the perch what are you going to talk about!
Estate Agency, of course.
Australia. Already looking to be a step too far. Sporting Ken having come home to be closer to his football club and string of racehorses upsetting the natives in NSW with his tombola event in an effort to persuade vendors to lower prices. Now offering differing fee structures in the various States.
Hardmans were very bullish about Bricks prospects in Oz.when launched Forecasted a maiden profit of £8.1m for FY 20..,Good luck with that one.! Talked a good game too that revenue would eventually come within 75% of UK Indeed !
Its noticeable that Hardman reports on Bricks are no longer in the public domain !!!!Michael Bruce in August 2016 said he expected them to have 300 experts lined up within 2 years. Maybe he has if it includes the ones that have left already !That has all become a little flat .
The sad truth is todays instructions are 1386 .In October 2017 it was 1315 and in June 2018 it was 1560
The boomerang certainly coming back with a vengeance Sports promotion now features very highly in the Bricks campaign both here and overseas .They now sponsor top rugby league in Oz Melbourne Storm
https://ministryofsport.com.au/purplebricks-take-over-crown-as-storms-new-front-of-jersey-sponsor/
In OZ, Agents are leaving at the same pace new recruits finish training.
Apparently they’ve stopped underpinning too, so lots of people will find it even harder to eat and pay the mortgage.
Sorry Kenny, but expecting people to literally pay to work for you doesn’t actually last long once they realise they’re going backwards.
JV
This report for W.Aus in your neck of the woods was interesting.Any views?
https://www.openagent.com.au/blog/using-purplebricks-in-wa
But if a puff piece!
Zombie firm – limbs will start to fall off.