PurpleBricks shareprice doubles in under 2 months.
Since the latter part of January this year we have seen the shareprice of PurpleBricks double from the low of 70p, this now values the company at around 330m pounds as of last friday, thats not bad for a company still in its infancy with massive advertising costs, is the market however about to embrace this business model?
The new online estate agency business model is only following what has happened on the High street to other forms of businesses like, Banks, Travel Agents and Clothes Shops, people no longer see it neccessary to try on clothes before they buy them, look at the likes of Boohoo and ASOS.
I really believe that PurpleBricks still have everything to prove despite their expensive advertising campaign, they really need to move to another level to justify what I see as an expensive valuation.
High Street Agents are highly unlikely to allow them to grow their business without making a challenge, already agents have cut their fees to be competitive, (that is a postive for the client) The likes of Rightmove and Zoopla will be keeping a close eye on potential competitors and improving their service to both agents and home hunters alike, I am sure Onthemarket.com will also be monitoring PB’s progress closely. Other online Hybrid agents are entering the market all the time along with those that already exist, such as Tepilo, to mention just one.
The future could be rosy but these are very early days, costs and how PB manages effectively their team of local experts will be the all important factors in how the business progresses over the next 12 months and to what value is put on the company then.
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