One of the UK’s leading shares buying advice services has claimed that investors are becoming more and more sceptical that Purplebricks can truly disrupt the traditional estate agency market.
The Motley Fool website is recommending that investors sell the company’s shares and challenges whether Purplebricks will move into profit before 2020, as has been predicted as its overseas expansion continues to eat into its bottom line, as its annual report published yesterday revealed.
“As geographic expansion lifts costs and conditions in its UK marketplace worsen, I reckon this prediction is looking a little optimistic right now,” the Motley Fool advice column says.
“I would be very tempted to sell Purplebricks today given the possibility of more scary details emerging when it releases its six-month trading update on November 6.”
Although its UK operation made a £4.2 million profit on revenues of £78 million and saw its instructions rise by 56%, its overall group – which includes its loss-making US and Australian operations – made an overall loss of £24.7 million, up from £6 million last year.
Despite the advice from the Motley Fool, which is US based and has been offering private investors financial advice since 1993, the Purplebricks share price increased yesterday by 5%, and has increased by 12.4% over the past week.
“We are confident that Purplebricks’ market leadership will continue, given the strength of its brand, the continuing investment into team, technology and processes and our £153m war chest for global growth, following the strategic investment by Axel Springer,” Group CEO Michel Bruce says in its annual report.