Purplebricks Plummets as Global Housing Slowdown Dims Outlook
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Purplebricks Group Plc fell by the most on record after the U.K. real estate broker pared its revenue forecast for the second time since early December and disclosed the unexpected departure of two top executives.
The company, which has become the largest online broker in the U.K. by charging a fixed fee instead of a commission, began expanding into Australia and the U.S. just as those markets started stuttering. That’s prompted Purplebricks to cut its sales guidance for the year by about 20 percent. Both its U.K. and U.S. chief executives will leave the business.
Shares in Purplebricks fell as much as 39.4 percent, the most since its December 2015 trading debut. A housing slowdown that’s gripped major cities globally from New York to Dubai and Hong Kong has been gathering pace, dimming prospects for brokers. In the U.K., the company’s largest market, the messy Brexit negotiations have exacerbated a drop in home sales, with transactions in London near historic lows. Australia is also facing a slowdown, while a marketing push has failed to translate into expected sales in the U.S.
Purplebricks, which offers online and some traditional brokerage services, expects to bring in revenue of 130 million pounds ($170 million) to 140 million pounds this year, down from an initial estimate of as much as 185 million pounds.
“Given the tough trading backdrop in its key regions and the recent changes to customer propositions in the U.S. and Australia, revenue visibility is low and the near term growth outlook has weakened,” Peel Hunt analysts including Gavin Jago wrote in a note Thursday.
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