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Purplebricks on the defensive

Sales data are incorrect claims the online estate agent
February 5, 2018

Public companies don’t often issue responses to broker research notes. But that’s what Purplebricks (PURP) did after its shares fell sharply in reaction to a downbeat analyst note issued by Jefferies International. The note suggested that the online hybrid estate agent was achieving a listing to sales ratio of just 52 per cent.

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Purplebricks refuted the numbers, pointing out that the estimates were based on just one month’s data, and did not include sales completed but not yet uploaded onto the Land Registry. Purplebricks estimated that the most recent listing to sales ratio is more like 78 per cent.

Since the group listed in December 2015, some investors have questioned its revenue recognition policies. Purplebricks does not report the proportion of instructions that lead to completed sales.

The report prompted Purplebricks to issue an update for the all-important spring market, which stated that instructions in January were up two-thirds year on year, while its share of the online market increased to 77 per cent. Trading in Australia remains on track, while the opening in some US states is proceeding according to plan.