Purplebricks urged to close its ‘lame horse’ US operation
Purplebricks has been urged to put its ‘lame horse’ US operation out of its misery when it gives a hotly-anticipated market update on July 3.
The online estate agency has been hit by one setback after another in recent months, including the departure of founder and chief executive Michael Bruce, a plummeting share price of less than £1, and the ending of its disastrous foray into Australia.
On July 3 Purplebricks will release details of its full year results and an update of its review into its US activities.
A lot of the company’s problems have been linked to its performance in the US, where it has been burning cash.
Ahead of the announcement, veteran estate agent Russell Quirk told BusinessCloud it was time the company ended its interest in the US once and for all.
Quirk launched eMoov in 2009, growing it to become the second biggest online estate agency behind Purplebricks, before it went into administration after running out of cash.
“The horse is lame so they need to put it down,” was Quirk’s brutal assessment of the US operation. “I have a saying ‘if the horse is dead, get off’. Purplebricks is flogging a dead horse with its US operation.”
He said he expected one of two outcomes at next week’s market update. “I think they will either roll out of the US and concentrate on the UK, where they can probably grab an 80 per cent share of the online market and succeed, or they may try and package off and sell the US operation.”
The firm was founded in 2012 to disrupt the traditional real estate industry and was valued at £1.5bn in July 2017.
Updated analysis into the online estate agency sector has dealt another blow to Purplebricks. According to TheAdvisory, the top 10 online estate agents accounted for just 3.8 per cent of all new properties listed (down from a market share high of 5.19 per cent in May 2019).
Purplebricks’ market share of the online estate agency sector nudged up from 69.6 per cent to 70.2 cent, down from a high of 71.8 per cent in February 2019). Housesimple lost momentum and were caught by Yopa to tie for second place on the Top 10 online estate agency ranking table.
Gavin Brazg, founder & CEO of TheAdvisory, said: “Reports of the death of high street estate agency have been greatly exaggerated. For all the promises of disruption, and all the money spent, the top 10 players in the online estate agency sector have only managed to amass a paltry 3.8 per cent market share.
“If the sector were a house it would be a ‘money pit’. With this current market share, I can’t see many high street estate agents lying awake at night petrified they’re about to experience their very own ‘Uber’ or ‘Amazon’ moment.
“Despite their eye-watering marketing spend, Purplebricks new listings seem to have remained broadly in-sync with the market as a whole. Our independent analysis seems to show they are not outperforming the market, and so it’s hard to see how they’re going to grow the company to take double digit market share.”