0917 Friday 14 December 2018
Over the past few years, the rise of online estate agents has not only captured the eye of home owners and buyers, but also investors. When Purplebricks IPO’d in late 2015, they opened at 97.00 and saw exponential growth up to 514p by mid-2017. Rightmove also saw their stock go from strength to strength hitting a peak of 534p this June. Following on from the success of other firms in the industry, it was widely though that Emoov were on the verge of IPO’ing this year after a series of crowdfunding rounds so successful that they gained a £100m valuation through a three-way merger. However the headwinds of Brexit and rising consumer uncertainty have taken its toll on all three companies, putting the entire online estate agency sector at risk.
Since Purplebricks hit their peak, it has been a downward spiral for the stock ever since, losing over 70% of their valuation. An exclamation point was added yesterday when the company announced their latest figures. Despite a large increase in revenue, the firm revealed that its operating loses had more than doubled to £25.6m. The market was quick to jump on this and the stock price dropped nearly 15% before the end of trading.
Rival firm, Rightmove, is now also showing signs of a downturn in fortune, albeit less drastic as they offer a different business model. In late July this year, Rightmove announced a rise in profits as the agents that advertise with the firm were paying more for listings on their site. However July was a peak for the company and its seen a 17% decrease in valuation since.
While the aforementioned firms have seen a descending trend, the fate of Emoov has been far worse. There had been very high hopes for Emoov and its future, private investors certainly thought so as it raised cash via crowdfunding, but the whole market was shocked when a report came through the wires on 29th November that the firm has entered administration and had called in insolvency practitioners to divvy up the various units of the firm. The news came as such a surprise as it was only five months after their merger with two other firms saw their valuation reach £100m and since then blame has been bandied around between investors including Sarah Beeny and Richard Desmond.
Investors may still be casting an eye over the remaining players in the sector as both Purplebricks and Rightmove could present an opportunity to buy on the dip. Once Brexit has been concluded, and as we all know there is no timescale on that, it would be more than reasonable to assume that consumer confidence will increase leading to a rise in home sales.
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