Purplebricks, the once-promising property firm, is set to de-list from the London Stock Exchange’s Alternative Investment Market (AIM) on June 16, marking the end of a catastrophic decline in its market value. Since its initial public offering on December 17, 2015, when it debuted at 100p per share, the company has suffered an unparalleled collapse that has left many investors stunned.
From the start, Purplebricks’ valuation at £240 million raised eyebrows within the mainstream estate agency industry, which felt threatened by the unconventional tactics and language employed by the company’s founders, the Bruce brothers.
Although the first month of trading showed no signs of the drastic fluctuations that would follow, it did indicate the volatility that would become synonymous with Purplebricks’ shares. On its inaugural day on the AIM, the stock closed down seven percent at 93.0p, failing to inspire confidence among investors. It briefly rallied in the early months of 2016, reaching 99p by January 5, but soon declined to a mere 75p by mid-January.
In January 2016, prominent fund manager Neil Woodford, now infamous for his controversial Woodford Investment Management fund, increased his stake in Purplebricks to over 25 percent. This move appeared to ignite an infatuation between investors and the company’s shares. By early 2017, Purplebricks’ stock price soared to 193p following a tweet from the company claiming record-breaking valuations and instructions, creating a sense that online and hybrid agents might indeed disrupt the market.
However, the summer of 2017 proved to be a turning point for Purplebricks. The company faced its first major setback when undercover reporting from a BBC show exposed exaggerated claims made by the online estate agent. A BBC Radio 4 program, “You and Yours,” stated that Purplebricks had been making misleading claims prohibited by the advertising regulator. The same day, BBC One’s “Watchdog” program revealed emails sent by Purplebricks to customers that echoed these deceptive assertions.
The controversy surrounding Purplebricks’ practices, along with the ensuing TV interview with founder Michael Bruce, sparked a tumultuous rollercoaster ride for the company’s shares. Throughout the summer of 2017, the stock experienced significant single-day losses of up to seven percent, as well as record highs, with the peak reaching 514.99p.
Subsequent missteps, including unsuccessful international expansions and frequent restructuring of prices and sales offers in Canada, the US, and Australia, further eroded investor confidence. In 2019, Michael Bruce’s unexpected departure from the company caused a 12 percent slide in Purplebricks’ London share price. Ongoing post-Brexit uncertainty and criticisms of the company’s sales record contributed to a long-term decline in share price, punctuated by dramatic single-day falls.
By autumn 2021, Purplebricks’ shares were trading at a meagre 30 to 40p each, representing just seven percent of their all-time high. In November of that year, the stock plummeted by 37 percent in a single day following a profits warning, despite the favourable business conditions created by a stamp duty holiday.
Recent history has been a narrative of continued decline and occasional denial. Last month, investment group Lecram Holdings, which held approximately five percent of Purplebricks’ shares, withdrew its offer to acquire the company, citing unexpectedly dire financial conditions.
Now under the ownership of Strike, which was purchased for a mere £1, Purplebricks’ new CEO, Sam Mitchell, claims the company is returning to its disruptive roots by slashing prices for customers. Meanwhile, Dominique Highfield, Purplebricks’ former CFO and a member of the management team under Strike’s ownership, boldly states on LinkedIn that “the power of two online estate agents combined is set to truly disrupt the market.”
As Purplebricks prepares to de-list, the share price hovers around a mere third of a penny, marking a staggering 99.6 percent drop from its launch price. While the de-listing may offer some respite to shareholders, the tremendous losses incurred will not soon be forgotten.