Purplebricks’ share price has plunged to an all-time low, falling 60% in morning trading to just 2.17p (last updated at 10.46am).
The share price collapse followed a warning this morning by the struggling online estate agency that a sale of the business could potentially leave shareholders nursing losses.
Purplebricks said that while negotiations over a proposed sale of the business were ongoing, ‘the transactions being contemplated, if concluded, would be expected to deliver returns to shareholders materially below the company’s current share price’.
In a gloomy update, the group also issued a warning over its cash reserves, which Purplebricks said would be under threat if its strategic review and sale were not completed soon.
The online-based estate agency said its previous expectation of returning to cash generation in early financial year 2024 was unlikely.
The company has been further hampered by the downturn in the property market in recent months, driven by the sharp rise in mortgage rates deterring many purchasers and vendors.
The group also said the idea of an equity fund raise continued ‘to lack the necessary support’.
Purplebricks told investors: ‘Presently, a small number of parties remain in discussions with the Group in relation to the sale of the Company or some or all of the Group’s business and assets.’
The company expects to have finished the financial year ending 30 April in line with performance expectations and said a small number of parties remained in discussions with the group regarding the sale of some or all of its business and assets.
However, instruction levels did not increase during its final quarter as expected, at 5,672 compared with 10,964 a year before, which is likely to hit the group’s bottom line at a later date.
Purplebricks’s payment processor for ‘pay now’ instructions has exercised its right to withhold a portion of remittances to the company.
Purplebricks said: ‘This withholding and level of instructions has impacted the Company’s cash position, which as at 30 April 2023 is estimated to have stood at around £9.1m.
Purplebricks endured a turbulent 2022 as it struggled with implementing a new operating model, saw at least three major management reshuffles and one of its top-ten shareholders, Lecram Holdings, call for the removal of Paul Pindar as chairman.
In February, Purplebricks said its board had recognised that the potential of the group may be better realised under an ‘alternative ownership structure’ and had decided to conduct a strategic review. That review would include a formal sale process, the company said in March.
The group also said its full-year adjusted underlying loss would come in between £15m and £20m – larger than the previously expected loss of between £8.8m and £11.3m.
EYE NEWSFLASH: Purplebricks’ access to cash under threat as sale update issued
“Death” and “Throes” comes to mind…..
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Only 60% drop? I am surprised it is that low,
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Sounds a bit terminal to me, but miracles do happen.
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Sympathy for the staff – 100%
Sympathy for the investors? Not really
Sympathy for Purple Bricks itself? Absolutely not.
The Bruces clearly got out at the right time.
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‘The share price collapse followed a warning this morning by the struggling online estate agency that a sale of the business could potentially leave shareholders nursing losses.’
It took ’til today for people to work this out???
Wishing the staff good luck moving forward – it must be a very stressful time for them.
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That’s what happens when incompetent people are let loose on complicated problems. Still being paid though.
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At what point does it become clear a business is no longer viable ….. 1p! If you want to sell your business it needs to be profitable or at least could be made profitable. Now remind me, when has PB ever made a true net profit, ever paid its shareholders who ploughed £m’s to fail? The end is nigh.
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As you’ve asked- 2014
I assessed the business in 2014 and said it wasn’t ever going to do any of the things it claimed. I wasn’t being anything other than objective, there’s no point in that. I was either going to be right or I was gong to be wrong.
The whole pitch was reliant on Uber group-think- ‘its all going online- innit?’ As I said way back then on more than one occasion it’s not possible to take the service out of a service industry and expect to have a business.
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I said exactly the same. It was entertaining back then, averaging nearly 100 posts per story, back and forth by those who said it would work. Noticeably they have disappeared from the planets surface just like all the other would be best business ideas that have failed on the same business model.
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Well like with Rightmove,. the industry didnt come together to beat bricks.
Lucky our inept govt. did it for us.
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” This industry ” and “Coming together ” is like oil and water, you either get a rainbow or dead fish, always the latter in agency.
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