Rightmove could cut its prices “a little” to see off OnTheMarket, a financial writer has said.
Michael Taylor, writing in the Motley Fool, says: “It seems to me that Rightmove just needs to lower its prices a little in order to strangle On The Market Property into submission.
“The company is the market leader, and I don’t think it will be feeling challenged by this estate agent-founded competitor anytime soon.”
Taylor is critical of OTM, saying that it is a stock to avoid because of its business model.
It says that giving away shares to agents to incentivise them to join means that the “more estate agents sign up, the more dilution there will be”.
He goes on: “Dilution is important because the number of shares in a business is crucial – anyone who is a current shareholder sees their percentage ownership in the business diluted when new shares are issued.
“As the price gets lower and lower, more and more shares need to be issued to the estate agents that sign up. It’s a negative cycle of destruction.”
Taylor is also concerned about OTM’s finances, saying that it has been burning through cash.
He says: “If we do the maths, then it doesn’t take a genius to see that the company is likely going to be out of cash by the end of March.
“That means another fund raise – and these fund raises are rarely at a premium to the current price.”
OTM has, however, told the stock market that it is converting more agents to paying membership. It said on Tuesday that it has added 3,000 more paying agents than there were when it listed on AIM in February 2018.
https://uk.finance.yahoo.com/news/why-d-sell-market-property-084421695.html
Comments (6)
They won’t drop there fees as long as stupid Agents continues to pay them! Get some ba**s and drop them RMEXIT.
What about a referendum on leave or remain….. RMEXIT
RM will never reduce fees, their masters in the City simply wouldn’t allow it.
True that reducing RM fees would be a fly in the ointment, but who would trust them not to then increase. It raises the big question, if you can reduce, why are you charging so high now. Trust in RM has gone and you can’t buy trust.
RM are killing themselves slowly.
The are gobbling up the hand that fed them.
RM will never drop their fees to £150 (OTM monthly fees) or £150 (Z monthly fees).
Within year more and more agents would have left RM. When RM goes down it will go down go under quick. Just a matter of time.
OTM needs to change its Leadership & its Strategy to remove Rightmove.
I suspect that will never happen ……sadly.
Rightmove’s tipping point arrived around a year ago, they need to change their strategy, which I also suspect won’t happen.
Interesting times ahead……
RM are not remotely bothered by OTM anymore.
If RM lowered their fee would everyone drop OTM?
I suspect once OTM was finished, RM would put a double rise back on and say, now don’t be pissing about and trying that “Agents Together Shite” again please…