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Agencies & People

Shares tipster gives Purplebricks tepid review ahead of its full-year results.

Times writer says company faces many headwinds despite recently selling its Canadian operation for £35 million.

Nigel Lewis

clarence purplebricks

A leading shares tipster at The Times newspaper has given Purplebricks a ‘hold’ rating, recommending that investors neither sell nor buy the company’s stock.

This less than ringing endorsement for the company from the newspaper is based on tipster Louisa Clarence-Smith’s view that the hybrid agency may struggle to increase its revenue and market share in the present Covid-infected climate.

Her influential advice column follows last week’s announcement that the company had offloaded its Canadian business for £35 million, helping boost its cash at the bank to £66 million.

“The sale of the Canadian business has strengthened the company’s foundations,” she says. “However, it is difficult to see how it will grow from there.”

Shares dip

After being published, the column helped drive down the company’s share price by 15% yesterday before it rallied towards the end of trading on the FTSE.

The reasons given by Clarence-Smith’s downbeat assessment of the company include the uncertain staying power of the current mini-boom within the property sales market and tightening mortgage ability among Purplebricks’ key younger home buying demographic.

She also suggests that many vendors are likely to pick traditional agents when the market is more volatile and, later this year, homes might become more difficult to sell.

But Purplebricks’ biggest test is due on August 3rd when the company is due to reveal its full-year results for its 2019/2020 financial year.

July 23, 2020

One comment

  1. Continuous cash burn, over 2M a month, by Jan 2020 over 363M had flowed through the company, with 117M of losses and cost of running the UK and other businesses was 481M over the past five years.

    Last year I predicted that by March they would have about 31M in the kitty, that seems true, the Canadian top up of 35M looks a great cushion, but in one year 2018 to 2019, they burnt through over 90M, with cash at bank 152M down to 41M by April 2019.

    Re-trenching to the UK should keep the cash burn down, but at 2M a month, and a slowing market next Spring, their runway is two and a half years at best, maybe much shorter. And with more agile models rolling out and Boomin perhaps the next generation of agency being developed, it might be time for this experiment.

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