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Purplebricks Takes a Tumble

Posted by Richard Ward in

Image courtesy of Flickr, Creative Commons

Purplebricks, the online estate agent, saw its share price crash 35% this morning when the market opened, wiping more than £150 million off the company's value. At the time of writing it recovered slightly but is down 29.4% on the day and is 60.9% lower than the same period a year ago.

The collapse in the company's share price came after it cut its revenue forecast for the year.

Initial expectations had been for 2019 sales to reach between £165m-£175m, however Purple Bricks now expects revenue of between £130m-£140m for the year.

The group cited headwinds in the Australian market and a slower than expected response to its marketing campaign in the US for the downward revision.

The group also announced that the chief executive of its UK and US business will be leaving the company.

In a more positive note, the company said that despite a challenging agency industry, it expects sales in the UK to rise by between 15-20% year-on-year.

The group added: "The Company also expects to maintain its 75% share of online instructions and for Purplebricks to continue to be the clear market leader in hybrid estate agency."

In its surprise trading update, Purplebricks' chief executive Michael Bruce, said: "Although there are macro and industry headwinds across markets, we are well placed to capitalise on the significant opportunity for growth that exists in each country, albeit not entirely as we would have wanted before our year-end."

"The UK is leading the way with continued profitable growth and a strategy to deliver greater success. I am also excited to be taking the reins of the US business."

He added: "The board remains confident of the long-term growth potential of the business and the opportunity to deliver substantial value for shareholders."

Purplebricks does not typically publish a breakdown of exact sales figures, but for its latest financial year which ended in April last year, it reported a loss of £26 million, up from a £6 million loss in the previous year.