Purplebricks’ share price dropped by nearly 26% yesterday following its shock announcement that the company’s UK and US CEOs are to leave the business and that its group revenue is likely to be significantly lower than expected.
During early City trading yesterday its share price dropped by nearly 40% following the company’s update from £1.64p to £1 a share, before stabilising at £1.23, an overall drop of 25.6%.
Investors were rattled in particular by Purplebricks cutting its annual revenue guidance by £35 million, warning that its Australian and US businesses were unlikely to meet expectations.
The collapse in its share price came despite its lowered £130-£140 million estimate for 2018/19 being considerably higher than its previous year’s effort of £93.7 million.
“Clearly, again, a disappointing update by the company which underlines that visibility remains low and trading is volatile,” a JP Morgan analyst told Reuters, revealing that many investors were rattled by the departure of its US CEO Eric Eckhard, who had been “well-received’ in City circles.
Analysts at Investec said the company’s predicted reduction in sales growth from 27% year-on-year to 15-20% was also “disappointing”.
Online rivals pounced on the news including recently-launched FSBO portal OkayLah.co.uk.
Its CEO Paul Telford says: “While the online sector continues to stutter with the low fixed fee causing an issue for the agents, and a wavering level of service deterring customers, the alternative is to spend an average of £3000 with a high street estate agent although again, the service element is often lacking. Hobson’s choice if ever there was.”