Lettings will be key to the future success of Purplebricks, says Investors’ Chronicle – and expect acquisitions.
A blog by Ian Smith makes clear that Investors Chronicle has been “a fan” of Purplebricks when it listed on the stock market last December.
The publication rated it as a buy in January when shares went down from their £1 launch price to 77p.
Since then, the share price has more or less doubled – and that, says Smith, is “pricey for a company that has not yet posted a profit”.
He goes to pose some questions: Purplebricks gets paid whether the home sells or not whereas traditional agents are paid on completion.
“The question is whether Purplebricks cares as much about finishing the job,” says Smith.
He notes that Purplebricks in its results talked about sales – but these are sales subject to contract, and a proportion will not complete.
The piece concludes: “I think Purplebricks will be tougher to catch up than rivals suspect. But if there is a sales gap in its estate agency business, it will soon become apparent.
“Other than customer service, its challenge is to expand its geographic reach (in progress) and revenue streams now that its domestic market has woken up to the hybrid model.
“Lettings will be key, as a liquid and higher volume business: expect acquisitions to complement organic growth.”
* Meanwhile, mystery surrounds a review of Purplebricks which appeared on Trustpilot. The uncomplimentary review somehow earned a five-star rating.
https://uk.trustpilot.com/users/5768f5f00000ff000a2b1bf0
Comments (5)
Well they certainly have it all to do on the lettings side with only 286 instructions .as of today Admittedly their TV campaign has been geared towards TV advertisingso its going to involve another great slug of moneyto kick this up the ladder.
https://uk.trustpilot.com/users/558ac27b0000ff0001c82865
This recent Trustpilot review on theri lettings indicates they have a lot of work to do in this area .This 5* star Trustpilot rating in June they are currently highlighting as an integral part of their TV campaign is starting to look a little wide off the mark.
With an increasingly difficult market no hay -no pay doesnt seem half bad
With the budget agents saying they offer traditional services. And with comapnies like Countrywide and others going head on with low cost listing (more DIY) estate agency options, which is a great game play.
We will see more traditionals offering a budget list only service, that should be played as a poor relation option. This will give the more traditionals and hybrids the opportunity to distinguish between budget and BETTER.
If thousands of agents take this stance, then the budget agent goes from being one of a few, to one of many and nothing special. Allowing better quality agency to achieve justifiable higher fees.
Budget agency has some future, but premium better service agency should be concentrated on which end game consumers will buy in to.
Looked at PB share price
Going the same way as Australia at the moment !
🙂
Yes, I don’t know how we’ll keep up with Purplebricks, by turning this year’s profits into a huge loss by next year.
Has anyone else worked out the numbers based on the published facts? It is obvious Ian Smith hasn’t.
Based on the known, published and claimed numbers go and figure out what their listing volume (actual) is,what their actual achieved figure is. Compare the average price achieved by Purplebricks (based on their numbers) against the UK transaction average (all transactions) which based on land registry figure was £271,000 for the period.
I can think of 57396 reasons why I wouldn’t use them and why I couldn’t recommend anyone else does.
As for making a profit someone needs to look at the average income per listing against the average cost per listing, now they’ve been published, and wonder why there is such a significant negative gap between the two. I appreciate there is a point where fixed costs are covered but the gulf between listings claimed and listings actual is so wide I do not understand how they will claw back £11.9million in the next financial year let alone deliver huge profits. They are now £52.9 million behind where their business plan predicated they would be by the end of the 2016 trading year.