Investors are becoming increasingly perplexed by Purplebricks as its share price continues to plummet on an almost daily basis, a leading expert has said.
Since the beginning of June the estate agency’s share price has dropped from 90p a share to 61p at close of trading yesterday.
The decline has accelerated in recent days since it revealed plans to bring all its field operatives in-house as staff, declining by 71p a share to 61p a share, a 13% drop.
Purplebricks’ stock has performed poorly during Covid while many estate agency share prices have increased as the market has boomed, declining overall by 40% in value.
“I think the challenges for Purplebricks are two-fold,” says industry watcher and Twindig founder Anthony Codling (pictured).
“Paying a low fixed fee seems like a good idea in a hot market. If homes are selling like hotcakes, why pay more?
“But it appears that Purplebricks has not been able to gain market share during the stamp duty holiday fuelled housing market.”
“Perhaps Purplebricks is a bit like Goldilocks, it doesn’t work if the market is too hot and it doesn’t work if the market is too cold and the perfect temperature range appears quite narrow.”
Codling also says investors are clearly concerned that its recent decision to change direction and bring its field staff in-house as employees is a ‘significant change in direction’.
“Investors may also feel that the company that they invested in to disrupt the housing market has actually been disrupted but the housing market,” he says.
“The challenge for Purplebricks will now be to soothe the fears of its LPEs, and to show investors that it can once again look like a disruptor, walk like a disruptor and talk like a disruptor.”