Purplebricks stock hit all-time low as investor confidence ebbs away

Purplebricks share price has hit its lowest level ever at 19.5p per share as yesterday’s trading of AIM shares came to a close.

This is a low point for the company’s stock, which since June 2019 has been considered a ‘penny stock’.

These are shares that either trade under £1 each or are significantly below the price of comparable stock on the AIM stock market.

Apart from a rally during the post-Covid lockdown market re-opening when the property market saw a huge surge in property transactions and investors hoovered up estate agency sector stock, the company’s share price has been inexorably sliding downwards.

Results

This has been prompted by a litany of events including several sets of worrying results, the most recent of which revealed a surprising drop in its revenues and instruction levels, and in April 2020 one of its largest investors, Toscafund, offloaded its stock in the hybrid estate agency.

But the steady stream of poor news from Purplebricks also included the revelation that it had miscommunicated key statutory tenant deposit information to thousands of tenants, exposing itself to a self-confessed financial risk of approximately £5 million.

The further deterioration of its share price yesterday came despite City share tipster David Hill, who earlier this week tried to rally support for its stock with an upbeat view of its likely future performance.

Industry comment

“Purplebricks is a digital business, says industry consultant Andrew Stanton. “True digital businesses innovate at scale; use strategy to get to the top quickly and stay there, add value to customers, offer new value propositions, drive significant efficiencies and profit. A year ago it made a profit of £6.8m after six months for its total operations, now Vic Darvey announces a £20.2m loss, that’s a 397% downturn. You do the maths.”