Purplebricks’ share price plunged yesterday, at one stage falling to 262p.
The shares finished at 280p, 10% down from yesterday’s opening price of 311p.
The fall came as Purplebricks made clear the scale of its global ambitions, announcing to the London Stock Exchange a £125m investment by Germany-based international publishing house Axel Springer. The £125m is equivalent to around 15% of the market capitalisation, and is subject to shareholder approval.
Around £50m of the money will go towards accelerating the roll-out in the US. France and Germany now seem likely targets for Purplebricks.
Axel Springer has paid a premium for the shares as it has agreed conditionally to subscribe for 27,777,777 new Ordinary Shares at a price of 360p each, which represents a premium of 8.6% to the previous ten trading days’ average price – and much more than yesterday’s price.
In order to secure a shareholding in Purplebricks of sufficient size, Axel Springer has also agreed to buy 6,944,444 Ordinary Shares at 360p each, worth a total of £25m, from co-founders Michael and Kenny Bruce, and non-executive director William Whitehorn.
The Bruce brothers have agreed not to dispose of any more Ordinary Shares for 12 months after this sale.
Axel Springer’s investment in an online agent is likely to prove particularly interesting given that it already operates leading European property portals, such as SeLoger, Immowelt, and Immoweb.
As such, the strategy appears totally different from – and possibly worrying to – Rightmove and Zoopla.
Yesterday’s announcement also revealed that “underlying softness” in the UK market and snow blown in by the Beast from the East made it likely that group revenues would be 5% below consensus.
The company said there had been a slower than expected start to the key spring market, with statistics suggesting that instructions for the industry as a whole were down 17% in the first three weeks of this month compared with the same period last year.
A further contributing factor was that 10% of Local Property Experts were taken out of the field entirely to go on a ten-day training course.
However, it said that during the last ten days Purplebricks has achieved “record levels of instructions” translating to a monthly run rate of nearly 7,000 instructions.
Yesterday’s announcement also covered proposed board changes.
Current non-executive directors Nick Discombe and Will Whitehorn are to stand down.
Dr Andreas Wiele, president of classifieds media at Axel Springer, will join the board, along with Adrian Blair, global chief operating officer at Just Eat.
Also joining the board are Simon Downing, founder of Civica Group, and Mike Wroe, former group chief financial officer of Just Eat.
The full deal will be put to a general meeting of shareholders on April 19.
Purplebricks’ financial year ends on April 30, with its results due to be announced on July 5.
Analysts at German bank Berenberg said that Axel Springer’s £125m investment was accompanied by a 10% dilution to existing shareholders.
However, it said that Axel Springer’s expertise and funding should enable Purplebricks to achieve its global ambitions more quickly and effectively. Axel Springer’s investment in an online agent is interesting, given its operation of property portals including SLoge, Immowelt, and Immoweb.
Of the guidance suggesting a drop in overall revenues, Berenberg said this trading update was “clearly disappointing” although the US and Australia expansion appeared to be on track.
However, Berenberg concluded that “given the 10% dilution on top of the revenue miss”, it was not surprised that “the shares have come off”.
Another commentator, William Packer of Exane, said:”The revenue miss will raise questions on the sustainability of revenue growth, although growth remains impressive in absolute. We expect this to support property portals and traditional agency sentiment.” He said he expected Purplebricks “and the wider online space” to take market share.
He added: “We see Rightmove as well placed as the key marketing partner for PURP and traditional agents.”
* Separately, the new Sunday Times Rich List for Ireland features Michael and Kenny Bruce for the first time. The brothers, from County Antrim, come in at 62nd place, with their wealth valued at €216m.
Comments (35)
The reason for lack of LPE’s on the road was partly down to over 30% of the NorthEast team leaving due to the conditions of working for Purplebricks, lack of support and how they treat their staff, sorry ‘contractors’.
Of course, another big question is, why is it that PB feels the need to take 10% of its ‘Local Property Experts’ off the scene for 10 days training?
It’s because they are not ‘Local Property Experts’ they’re just a bunch of chancers who can’t make it in the real world of Full Service Agency. In our local area, the PB ‘Local Property Expert’ lived 52 miles away and refused to attend a property to let in a surveyor, in a chain we were regretfully involved in because as far as he was concerned it was a ‘Day wasted’………..
Customer Service can go hang all the time people are making money, but when you’re doing neither, the truth will out!
🙂
The LPEs were on a jolly to the USA if you can call that ‘training’
It’s because they are not ‘Local Property Experts’ they’re just a bunch of chancers who can’t make it in the real world of Full Service Agency.
What an ignorant statement.
One question the stock market missed. Why were 10% of all LPEs’ suddenly required to undertake unlisted additional training? Perhaps it was regarding the concerns raised by the BBC about possible mis-selling of loan facilities to clients?
Or maybe as the country’s largest Estate agency brand they pride themselves on the continual professional development of their LPEs.
Lol, they’re **** dom, nothing more to be said if moving is the ultimate goal, utter list and walk garbage.
Think its more likely the bottom 10% in either listings or conversion. Begs the question how selfemployed you are when you can be made to come off the road and stop earning for two weeks and made to undertake training by someone who definatley isnt your boss at all.
Sounds more ‘zero hours’ contract to me………
I found it was like working for Uber haha! Or is that an insult to Uber?
Blimey Chris – if it takes TEN WHOLE DAYS to teach their public-facing representatives the difference between
“right” and
“wrong”
then some would say they’re flagellating one h£lluva large number of deceased specimens of odd-toed ungulates from the taxanomic family Equidae…
Hi Chris, no I think a lot was down to staff leaving. LPE’s (and the good ones at that) are going like rats off a ship at the moment.
Combination of low conversion, stock control and staff retention/recruitment.
Market appraisal numbers are simply not there for all the LPE’s in specific area’s due to flooding areas with LPE’s.
Many of the original LPE’s are either changing jobs within or jumping ship due to significant change in earnings.
LPE’s leaving has in turn left others with unmanageable stock numbers to control following inheriting vendors. They simply don’t have the time to service current clients and attend appraisals numbers required to keep conversion consistent.
Plenty of excuses back in Blighty of slow progress this month due to a number of LPE’s attending a jolly for a group hug
However short on detail back in California No progress report given where it seems the recruitment drive has been slow to deliver .a paucity of instructions and little activity according to various agents websites over there.
https://photovault.com/51897
Looks like one of the experts was not over impressed with the 10 day Brickathon. Our Sharon who has just shown a quick turn of heels and joined Yopa this month
ttps://www.linkedin.com/in/sharon-redhead-1349b351/
Looks like Yopa’s gain and Bricks loss as she seems a bright lady according to her profile having been granted a degree on leaving school
There are quite a few that have recently deserted SS PurpleBrick and gone elsewhere – some back to the High Street; some to other NSPR Portal Listing Facilitators.
Hard to keep track of the bu99ers, actually.
It’ll be interesting to see what ‘MrLister’/’P J’ has to say when his partner jumps ship for tomorrow’s shiny thing.
“A further contributing factor was that 10% of Local Property Experts were taken out of the field entirely to go on a ten-day training course.”
You have 52 weeks in a year. They have, apparently some 700 LPEs.
Some people take four weeks holiday a year.
Do the maths.
Blaming absence from duty is more of the smoke and mirror *********** (credit: Jonnie) that this entire industry model is built upon.
I think that PB and it’s investors ultimately see it as replacing rightmove. That would particularly explain Axel Springers interest.
The further it goes down this path the more likely it is that rightmove and Zoopla see their only choice as moving into the corporate agent space….a direct representative offering to the public.
They all see the independent sector as weak, disjointed and lacking in any way of being able to mount a cohesive response…..in any shape or form.
At this present time the independent sector have control over the largest proportion of the market….but we need to utilise that in our defence, before an all out war starts breaking out between corporates spending hundreds of millions aiming for market domination and enormous profits.
A strong independent alliance will act to counter that threat, restore balance and prevent some of the more extreme corporate positions developing in the first place.
I still think our independence, our livelihoods and our chances of realising an eventual business sale to help our retirement funds are increasingly under threat…….unless we start to act now.
Even if I am completely wrong about any of these concerns and predictions, an indepependent alliance will help protect all our businesses, and make us far more resilient against all the future challenges arising
What do others think?
With over 1 million hits a month PB may likely see the future as dropping Rightmove, like you say Axel had 2 of the leading portals in Germany and 1 in France.
So logic would suggest that they are working towards this, Rm should be a little worried.
Purple continue to put bricks in to growing their own wall higher.
Right Move are well placed, if the need arises, to create a competing hybrid agency with direct public access and then provide income to their existing constituency of agents, as a true network of LPE’s.
There are many combo’s and scenarios as the market plays out and in the end the market will decide whether PB are part of a streamlined future or, for some, an expensive classified ad.
“With over 1 million hits a month PB may likely see the future as dropping Rightmove”
Yeah – the week after H£ll freezes over.
Quicker the better far as I’m concerned – better to suffer a quick end than a lingering one, especially as this would entail making more and more unsuspecting customers suffer #CONmisery while the fight to stay afloat drags on.
Answer this, dom-boy.
Where do you think your quoted “1 million hits a month” come from?
”A strong independent alliance will act to counter that threat, restore balance and prevent some of the more extreme corporate positions developing in the first place”
I think most agents would put more trust in their ex wives than each other! Trying to set up an alliance will work about as well as On The Market’s performance.
PB have created a household brand within a very short space of time. Business investments like above are part of the growth and plan to expand further into Europe by year end. They already regularly get more hits than Zoopla, Googled more than any other agent and appear in the news worldwide on a weekly basis. Good or bad its branding. £125m is pocket change compared to what other investors will put into this business in the future. If any company out there that can take on Rightmove its PB.
TheHybridAgent
You have a vested interest in an independent alliance not working, but I think you are wrong…..because it has already started 😉
BSOS23PC
Screenshot my comment for the furture.
This will never work… FACT!!!
AgentV is right, a strong independent alliance is probably the right strategy. TheHybridAgent is under estimating how strong an alliance can be if it has the right components — Strong brand, low price, great service, and superior technology. OTM, Purplebricks, and even Rightmove are all missing 2 key components, one of which is superior technology. Its very possible to form an alliance and get the 1st 3 components right, but technology is a tough one to crack.
It will be interesting to see PB next move, the money raised could easily of come from a placing, however they seem keen to bring Axel Springer on board.
Maybe a launch in new territories, or some innovations with diversification.
Or some more misleading ads.
What a feeling it must be to become so wealthy off the back of a loss making entity.
PB is not Facebook – it will not move into profit without raising its fees considerably and when it does raise its fees it will die.
‘will not move into profit without raising its fees considerably and when it does raise its fees it will die.’
Yet the uk is already a profitable making business, so try again.
Yes Dompritch134 but look how much investment its taken to get them to make a small profit (debatable profit too) here and during that time PBs reputation as a credible agent has taken an absolute battering. The poor service, low selling price and hidden fees are all coming home to roost. If theyd have performed better than a flip of a coin will they/wont they 50% sale performance I may have agreed but its all starting to unravel now.
The share price was almost 15% down yesterday, 15%!!! its already almost 1% down this morning. Tick tock
This looks to me like they are trying to cash in before they plunge
Sorry Ed, but it was factually correct and didn’t make any claims 😉
That’s debatable.
If you read what was posted but deleted by PIE it was factually correct. PIE were one of the journalists to receive the notification on Sunday.
Hi Dom, I posted the below the other day but i assume you missed it. It was in a response to a post of yours.
“I dont trust estate agents any more or less than anybody else. I just find it hard to believe that anybody with more than half a brain cell would base investment decisions on this forum and i cant believe you or Dom think that anyone would which makes me wonder why you both defend Purplebricks but no other companies (that I am aware of)?
If you are crusaders for the truth and objectivity in order to inform potential investors I haven’t seen you challenge any of Purplebricks claims or their lack of transparency. Both yourself and Dom seem to be as Pro Purplebricks ad the vast majority of posters are anti. I can see the motivation in the posters being Anti PB but i cant for the life of me understand why you and Dom invest so much time and effort in supporting PB ?”
Fair play to the Bruce’s, build the hype, sell the shares!