Property group’s share price plummets in wake of rival’s administration
Purplebricks endured its worst day as a public company with its shares plummeting 13% to continue a torrid seven months’ trading.
The online estate agent’s share price closed at 151p – its lowest level in nearly two years – after suffering its largest one-day fall since it floated in December 2015.
Its shares have now fallen more than 60% since its year-high of 410p, reached in May, wiping nearly £800m off the market value of Purplebricks.
Last week its rival Emoov and its subsidiary Tepilo went into administration, citing cashflow problems.
Purplebricks’ founder Michael Bruce said his company would “do what we can to help” Emoov’s customers in a tweet last Thursday, although no rescue deal has been done.
I was very sorry to hear that @emoov has had to go into administration. Sad news for the staff and of course for customers who will be wondering what’s going on. @PurplebricksUK we will do what we can to help all of these customers and ensure they're not out of pocket.
— Michael Bruce (@michaelbrucePB) December 5, 2018
It has been reported that the administrators of Emoov are looking to raise £100,000 by selling its 5,000-strong vendor listings. Any deal is likely to include a share of future revenues which the list generates.
Simon Murdoch, a director of Emoov and managing partner of investment firm Episode 1, highlighted the challenge of having enough money for the levels of marketing required.
He said: “That’s hard if you are consistently outgunned by competitors with more cash at their disposal, particularly when there is such a dominant main player like Purplebricks.”
Purplebricks is due to publish its interim results on Thursday, which will be closely scrutinised by investors looking for any evidence of a slowdown in the property market and in the company’s growth.
There are also concerns about whether its high marketing spend is just needed to gain significant market share or will be a permanent feature of its business model.