Purplebricks not likely to make profit in Australia until 2022: UBS

Purplebricks not likely to make profit in Australia until 2022: UBS
Purplebricks not likely to make profit in Australia until 2022: UBS

Leading investment bank UBS has predicted that shares in Purplebricks, the international low commission estate agency, will soon hit £1 each, the price at which it floated in December 2015.

In May last year its shares were trading at £3.54p but are now exchanging hands at £1.33p.

It suggested the company will have to borrow another £100m ‘soon’ to fund its mounting group losses.

UBS has based its prediction largely on the worsening position for Purplebricks in Australia, which the investment bank claims will not break even until 2022, three years later than expected, while its US operation is not likely to break even until 2025.

The investment bank says it expects Purplebricks’ Australian operation to generate revenues of £26 million next year on which it will make a loss of £12 million, while the company’s US operation could lose £53 million.

“Operations in Australia and the US are characterised by having very limited visibility on the businesses’ development and break-even horizon – Australia keeps being postponed and losses in the US are expected to worsen”.

Referring to Purplebricks’ recent decision in Australia to alter its up-front model to a more traditional post-sale fee one, UBS say the move “raised concerns about the future of online agents and the upfront fee model”.

UBS is also concerned that parts of both Australia’s and the UK’s housing market are experiencing tough conditions at the moment, claiming that Purplebricks’ operation has lost momentum.

Purplebricks share price has been falling for the past 12 months. 

Purplebricks, which launched in Australia in 2016, recently opened operations in the NSW Central West by appointing an agent in Bathurst, David Chapman. 

Chapman started his real estate career in 2012 with First National Real Estate, then was the co-owner of LJ Hooker Bathurst, moving on to Century 21 Bathurst and then leaving the industry in 2017. 

Chapman told the local paper that Purplebricks "was the fastest growing real estate brand in Australia."

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Purplebricks Low Commissions

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