Shares of flat-fee brokerage Purplebricks saw record losses last week as the company trimmed its revenue expectations and announced the departure of two top executives.
The U.K.-based company — which is publicly traded on the London Stock Exchange — saw its shares plummet from 164 pounds (about $214) on Wednesday to a low point of just 125 pounds (about $163) on Thursday. The drop erased a quarter of Purplebricks’ market value and was the largest single-day hit the company has taken since its shares began trading publicly in late 2015.
Since late last week, the company’s stock has recovered slightly and was trading around 140 pounds Monday. Thursday’s drop follows almost a year of nearly consistent losses for Purplebricks stock.
Purplebricks operates in the U.K., U.S., and Australia and charges homeowners a flat fee to sell their property. The fee now varies by location, but up until recently was $3,600 across the U.S.
Purplebricks has a presence in California, Arizona, Florida and New York.
The stock price drop Thursday came as Purplebricks announced that both Lee Wainwright and Eric Eckardt, the U.K. and U.S. CEOs, respectively, were leaving the company. In a statement, Purplebricks said that Wainwright was leaving for “personal reasons.” It gave no explanation for Eckardt’s departure.
Vic Darvey, Purplebricks COO, will take over for Wainwright on an interim basis. Michael Bruce, the company’s global CEO, will now take on day-to-day management in the U.S. The company did not say when, or if, permanent replacements would be hired to fill the newly vacated positions.
Perhaps even more damning for the company, at least in the eyes of investors, was Purplebricks’ updated revenue guidance. The company now expects to bring in a maximum of 140 million pounds (about $183 million) during the current fiscal year, down from an earlier estimate of as much as 175 million pounds (about $229 million).
While those numbers do represent an increase over the prior year, the company’s statement painted an overall picture of a market filled with obstacles.
In the U.K., the statement explained, the “housing market has continued to be challenging for the estate agency industry.” The company also described “headwinds” in the Australian market, where the “anticipated amount of [recognizable] revenue will not be sufficient to meet expectations for this financial year.”
And in the U.S., there has been a “slower than expected response” to the company’s marketing, according to the statement.
“As a result of this, the Board does not expect the amount of U.S. revenue to be sufficient to meet its expectations in this financial year,” the statement added.
Purplebricks has spent a considerable amount of money to break into new markets, including the U.S., where it launched in Los Angeles in September 2017. However, the company’s stock market performance suggests investors are still waiting to see how Purplebricks’ business model is going to fare in a fluctuating or weakening housing market.
The company itself has also made pivots in an apparent attempt to find its footing, including adopting more traditional business practices in the U.S. such as offering variable fees that consumers pay at the end of a transaction.
Still, Purplebricks co-founder and CEO Michael Bruce tried to strike an upbeat tone in the statement last week, saying that his company is “well placed to [capitalize] on the significant opportunity for growth that exists in each country.”
“The Board remains confident of the long-term growth potential of the business and the opportunity to deliver substantial value for shareholders,” Bruce added.