Purplebricks starts the week with its shares having hit a new high and today’s valuation now at over £1bn. At least one analyst believes there is scope for the shares to go higher.
There is also conjecture that Purplebricks might no longer feel the need to list its properties on Rightmove and Zoopla – underlining the intentionally disruptive nature of Purplebricks not just to the high street but to the whole status quo of the residential property industry.
On the London Stock Exchange website’s comment section, one person asked: “At what point do you think it would be safe for Bricks to jettison RM and Zoopla 8,000 new instructions average pcm?”
However, proptech expert Eddie Holmes suggested that Rightmove should act first.
Holmes has previously said that one of the greatest threats to Rightmove is Purplebricks, as its inventory and consumer awareness grows.
He has now updated his warning, telling EYE: “I hope that Rightmove is not taking this threat lightly.
“Purplebricks now has at its command the potential marketing firepower to wipe the floor with every other estate agency. Rightmove has never been faced with anything like this.
“Further substantial capital raises for Purplebricks would be no problem at a market capitalisation of £1bn+.
“And yet Purplebricks is so vulnerable to the power of its supply chain – all Rightmove needs to do is hit the kill switch before it is too late.”
The shares finished on Friday at 400p, up from 395p the previous day.
However at one stage they hit an all-time high on Friday of 413.75p. Analysts at Peel Hunt have set a share price target of 435p.
Purplebricks starts the week with a market capitalisation of £1,094m, and its share price is now four times what it was when the company launched on the stock market in December 2015.
Comments (28)
Bring it on! Change and competition will have a positive effect within the industry. And really, is anything new? Instead of Countrywide, everyone just moans about PB now. People will always move home, agents will always transact, there will continue to be market leaders and losers.
Rightmove and zoopla should short PB shares then pull the plug, I reckon they would make a nice profit on the deal
Alternative view
PB generate £900 per customer
RM generate around £700 per EA branch
EA branch has around 50-75 active instructions.
The best move RM could make is to buy PB at a multiple of current share price and deal direct using PB model.
only EA’s who will survive will be one’s who offer PREMIUM service meaning end to end offering (including buying property/chain breaking)
2 things
A: No profit and “listing 8,000 per month”- True/False ?
B: Rightmove: it’s not like the traditional estate agents haven’t been blazing a trail for these onliners for the last 20 years only for RM to offer no loyalty
I hope PB do walk away from RM then perhaps we (those long forgotten trail blazers) should follow suit in reciprocal loyalty
Interesting read http://www.stockopedia.com/content/is-purplebricks-worth-pound11bn-189579/?comment=2#2
Good read of an interesting article Chris. I think the most poignant statement was;
If it is successful and sees rapid growth it will then see a step up in competition. With few barriers to entry returns will fall back and market share will most likely be lost.
A ‘step up in competition’ is exactly what could be achieved by a co-operative collective of like minded independent agents using new intelligent marketing ‘disruptive of disruptor’ software products!
I can hear Peter Jones and Deborah Meaden in the Den.
So you have yet to make a pre tax profit ?
Any you are valuing your business at how much ?
Still no pre-tax profit from PB – where and how do these people obtain their valuations.
Stockbrokers share dealing. Biggest con since the banking crisis.
It’s an absolutely idiotic comment. No sensible rationale at all for them to come off.
As ever the only key barometer for placing your marketing should be if it delivers an ROI.
John Kay, a distinguished economist, argues in his latest book that stock markets pereceived profitability is partly illusory and partly an appropriation of wealth created elsewhere – of other people’s money. An industry that mostly trades with itself, talks to itself and judges itself by standards which it has itself generated.
The major investors have little knowledge of the business and no supervision of the strategies of the business. The share price is more about anticipating other brokers changing expectations and the manipulative efforts of the financial p.r firms.
In the real world, estate agencies have the opportunity to make sure that this duplicitous operation never makes a profit. It requires them to increase their brand awareness in their individual communities to the extent that the PB tv adverts become irrelevant.
Its relatively inexpensive, but requires considerable effort
what like start a website only for genuine no sale no fee agents….mmm…. onthemarket.. your move.
Whoever made the comment is a little naive.
Guessing PB pay RM & Z somewhere around the 25k per month figure. Its pocket change for them.
Even if buyers and sellers first port of call (which its not) is indeed the PB website they would be foolish to ditch the portals for such relative small money.
Even with a £1bn valuation +/-£300k annual ad spend on RM & Z could arguably be better employed within their own branding and website surely.
With a social media APP.
Woodentop, are you developing one or would you like to?
The cats out the bag. Beyond me but some whizz kid is going to wake up sooner or later. It is the future as smart phones have taken over the PC.
Gary,
As Whaley points out its all about ROI – I doubt there is any better ROI they can acheive.
That’s like suggesting a Bott fly is no longer reliant on a cow having a backside.
Unless the cow has a newly developed anti Bott fly jab Robert?
We have talked about this very fact on PIE for months. And still RM and Z do nothing than appear to sit back and take the money.
But here is a thought. If PB switched off RM and Z so could members of OTM. It would totally fragment the market. But if in the meantime OTM had grown to say over 50% of all Agents membership, who would end up with the highest stock levels?
It is now vitally important above all else that we hear the pending court verdict and OTM move up a gear to increase its membership as quickly as possible.
Of course RM and Z could open their eyes, see the danger, and do something to both avoid the damage to the majority of their members now, and the future catastrophe to themselves.
Will they listen…..of course they won’t!!!
Its a very strange rumour to start in the first place…Purplebricks only exist becuase of tv adverts and rightmove..
If TV watchdogs did their jobs and Rightmove only allowed NO SALE NO FEE agents on its books PB would be dead.
What all of you don’t seem to realise is that RM and Z cannot legally ‘switch off’ PB. It’s not as simple as that. The Fair Competition Act and a host of other laws would impede this.
And think of it, if you’re an agent and your strategy is to undercut your competitors by offering cheaper fees or a different model, how would you like it if the portals simply decided to switch you off for no good reason other than your competitors complaining that you’re doing very well. It’s not how it works.
“What all of you don’t seem to realise is that RM and Z cannot legally ‘switch off’ PB. It’s not as simple as that.”
REALLY?
I think you will find that portals have ‘Kill Switch’ capability that they can use.
For example – any Agent can be ‘switched off’ by a portal if it is found that the Agent is not acting within the portal’s Ts & Cs.
I’m sure there are other examples. When I find them, I’ll let you know.
Do let me know if you find that offering cheaper fees or an alrenative model is breaching their T&C’s and warrants exclusion from site. As long as PB are not doing anything illegal or clearly breaching T&C’s, portals can’t just switch them without a major lawsuit incurring.
And amending T&C’s with the intention of excluding an existing member would be problematic too, from a legal persepctive.
I honestly don’t understand why so many of us put so much effort into illegitimatising PB instead of accepting them as new players and adapting our strategy.
Really? Your solution to the PB challenge is to hope RM and Z don’t allow them on site? Get up and get over it, is my advise. (This is not aimed at you, PeeBee)
“As long as PB are not doing anything illegal or clearly breaching T&C’s, portals can’t just switch them without a major lawsuit incurring.”
As you say… as long as.
And as far as the “major lawsuit incurring” goes – well… don’t you think it’s ‘a given’ that such a thing would be incurred regardless of whether pulling the cyberplug was perfectly legitimate, justifiable or otherwise?
In fact – don’t you think that it is that very threat that potentially has the vicelike grip on the ‘nads of the portals already?
“…instead of accepting them as new players and adapting our strategy.”
The floor is yours. You have nothing but waiting eyes.
Just one word of advice – I reckon that the value of facilitating the adaptation of the strategy of those Agents who are currently disadvantaged by the ‘marketing’ of others would allow you to buy yourself a nice cosy tropical island – so make sure you don’t let out too much too soon.
Have no doubt – if you possess the golden egg, then you will of course have a cushion made of finest, crushed purple velvet.
I simply can’t imagine a situation where Purplebricks would want to remove their listings from Rightmove and Zoopla.
Even if they alone achieved an individual market share of (say) 10% – their vendor clients are surely going to want to see their property advertised on a site(s) comprising the remaining 90% of available property. They would surely lose customers if they left the big portals.
Food for thought ….. Not if they continue to inject so much £m’s in TV advertising while RM do practically nothing? The next revolution is going to be moves into social media apps, which RM and alike will become redundant …. eventually. The only thing that keeps RM & Z etc afloat is agent support and when they are seen to being hammered from supporting the likes of PB …. well the writings on the wall.
I’ve lost count how many times over the years I have said … wake up people, you are not in control and you have fed the hand that bites you.