Purplebricks shares crash to new low after stark warning
By Laura Enfield | 10th May 2023
Shares in Purplebricks crumbled to a record low yesterday after it warned the race to find a buyer is likely to leave investors nursing losses.
The online estate agent said that while negotiations over a proposed sale of the business were ongoing, "the transactions being contemplated, if concluded, would be expected to deliver returns to shareholders materially below the company's current share price".
Following the trading update, Purplebricks shares plummeted by 64% or 3.53p to 1.95p, having slumped over 89% in the last year, reports This Is Money.
The group also issued a warning over its cash reserves, saying they would be under threat if its strategic review and sale were not completed soon.
It said its previous expectation of returning to cash generation in early financial year 2024 was unlikely.
Instructions from homeowners using the platform to sell their properties have also not met expectations - nearly halving in recent months to 5,672 compared with 10,964 a year before, which is likely to hit the group's bottom line at a later date.
The firm's woes have deepened further after the payments company it uses to process customer fees decided to withhold some of the cash.
Purplebricks said: "This withholding and level of instructions has impacted the Company's cash position, which as at 30 April 2023 is estimated to have stood at c. £9.1million.
"The Board now expects that the previously anticipated return to cash generation in early FY24 is unlikely, given the trading performance of the Group, and whilst the Strategic Review and resultant uncertainty around the future of the Group remain ongoing."
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