Purplebricks shares continue to tumble in aftermath of Jefferies research

 
Alys Key
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Online estate agent Purplebricks was hit by another share price slump this morning for the third working day in a row, as pressure builds on the company to publish its sales figures.

Shares were down over 11 per cent at lunchtime today, as questions continued to swirl over the company's business model.

This follows a seven per cent drop in the share price on Thursday when broker Jefferies questioned its claim to have sold 78 per cent of homes listed on its site.

Jefferies said that the rate was closer to 51 per cent. On Friday, shares fell again as more analysts responded to the Jefferies research.

Purplebricks charges a flat fee rather than taking a cut of the eventual sale price, meaning that the customer must pay the fee regardless of whether the property is sold.

The company has previously got into hot water with the advertising watchdog for not making it clear that the feed had to be paid either way.

Jefferies said that using the platform was the equivalent of a "£1,000 coin-toss", and that the business model had not yet been proved.

On Friday, Purplebricks said it contested the findings of the Jefferies report.

"Jefferies estimated Purplebricks’ completion rate is based on a single month’s data and does not include properties that have completed but have yet to be uploaded to the Land Registry, which can take several months."

It added a trading update for January, saying it had now sold and completed on over £10b worth of UK property.

But this then faced further criticism from analysts. "It is never edifying to watch a company go into bunker mode to defend itself against analyst criticism," said Chris Beauchamp, chief market analyst at IG.

"Purplebricks’ defence of its model after Jefferies sell-note may make the management feel better, but the image that is created does the company no favours. Better to suffer in silence and let the performance speak for itself."

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