Purplebricks Share Discussion Threads

[chimers] 21/9/2017 13:58

You need to get out more mate!! like honest!!

Your a bag holder.
Fall in love , sit there researching pointless guff about XYZ.

None of that pish matters mate!!

YOU AINT GONNA BE HERE NEXT YEAR!!

[egrid1] 21/9/2017 13:55

Chimers, you need to work on your attention span... I bet Day trading is beyond your horizons!

[hpcg] 21/9/2017 13:53

egrid1, thanks for the first hand account. When it comes to sales incentives are everything; this is especially noticeable when a company goes from revenue incentives to profit incentives. Much harder to drive the price down in the latter case.

IMO an ideal contract for selling a property would be a fixed upfront retainer, a fixed fee on completion, possibly scaled by time, and a profit share bonus above a certain sales price within a period. The latter would be fairly chunky. This is quite a complicated proposition to advertise, but a simpler split fee excluding the profit share would not be.

We know that the incumbents will react to any loss of business so I would expect structures other than the percentage model to become normal in relatively short order. When costs are marginal the majority of people will take the local shop front option, viz the rapid uptake of click and collect for goods.

[andy] 21/9/2017 13:42

danger,

Yes it looks like it.

PURP are getting very litigious, normally a bad sign in my experience.




egrid1,

Thanks for an honest appraisal, and that experience is consistent with some of the reviews on the site that have now been removed.


Someone told me they sold through Purple Bricks, and all was OK until a problem occurred, and then they had no real support from PB, and that was at the point where an estate agent would have stepped in to resolve matters.

[chimers] 21/9/2017 13:40

What a fkn windbag!!

[chimers] 21/9/2017 13:40

Zzzzzzzzzzzzzzzzzzzzzzzzz

[dangersimpson2] 21/9/2017 13:11

Is this a PR own goal?

[chimers] 21/9/2017 12:53

Poor very poor MDB

[rogthepodge] 21/9/2017 12:52

describes you pretty well, Chimers

and I can think of a few adjectives to accompany that, too

[andy] 21/9/2017 12:36

rog,

Then don't read my posts then.

I notice positive posts of the same mantra don't attract your criticism, I wonder why?

If I were you I would just filter me and then you won't be bored any longer.

[rogthepodge] 21/9/2017 12:30

Andy

every post you just repeat the same mantra

we know what you think

this is getting a tad boring

[andy] 21/9/2017 12:29

Rog,

It held, have you bought more?

[andy] 21/9/2017 12:28

Argentus,


Well we will have to see what Australia produces, but they have an even greater property bubble than we do, and the fear is theirs is going to fall as well.


So will the same metrics play out there as in blighty?

[pediment] 21/9/2017 12:27

It was 375.00 imo and it's gone, next major support 354.75

[rogthepodge] 21/9/2017 12:10

370 still holding

if this holds, I will probably buy more

[fft] 21/9/2017 12:03

Argentus,At which point does momentum investing have to turn into a traditional p/e related model ? It's all very well looking for sales growth, but at some point there has to be a business that generates a return to shareholders either through nav or dividends. When is the tipping point. Of course, it could be like Amazon and never pay a dividend, but they are relying on market domination to control the market. Can purp do that ? Seems unlikely.

[hpcg] 21/9/2017 10:54

305020 - Agree with your analysis.

argentus - For the majority of the revenue this is just a pass through so any valuation multiple involving sales is insane. That is Enron investing - or as we will find out when it goes to 0, Uber investing. On the other hand company performance metrics involving sales, such as marketing cost / sales or SG&A / sales is worth monitoring. In other words eliminate the pass through aspect to arrive at the tiny part of the business that PURP actually does.

[argentus1000] 21/9/2017 10:44

The difference between Operating Profit / PBT in the numbers above is £3m on share-based incentive payments (options et al), not interest. They have net cash £70m by 20E & positive FCF that year of £16m. They are a WC positive business model.

Sorry; you should read closing your short as me saying BUY - They are the same thing after all. But it's pretty clear the bears have entrenched views so saying 'you should buy this' is going to fall on deaf ears, certainly for people convinced its a short. I'm simply giving the (free) benefit of my own view on this one (and have been interested to see others opposite views). I don't know you, nor anyone else here; but hey I think I'm right on this one into the print and it would give me a small warm feeling to know I've helped a punter to not lose money. I'm not sure why I'd be expected to bang the drum hard on this one; There's really no incentive for me to do so. It's up to you what you do, and not like you're going to cut me a cheque if you make (or don't lose) money on my recommendation. As you say, do your best, it's your money & your decision.

If you've made money on your short so far; good effort and better than I've done in recent weeks on this one, that's for sure.

P.S. my view re technicals is that they are broadly useless, and used to verify existing views. Occasionally they can be useful as an indicator for timing, but fundamentals are what matter most and what drive share prices LT.

Andy; I hear your point loud & clear. That said, it's irrelevant into next week's update. If international expansion really does take off (and they're growing faster in Aus than they were at the same stage in their UK expansion) then really poor ol' Blighty's housing issues are not going to be relevant for long.

[thirty fifty twenty] 21/9/2017 10:28

So at least we agree ....
that if the stock falls 5% from here there will be the start of a serious de-rating!
so you think that a stock has fallen 25% already in less than a month but that a de-rating will only start after the next 5%
we are also agreed that the stock is on a huge valuation (even after the 25% fall.

what I find with most bulls on this stock is that they muddle the business and the rating. I fully expect PURP to meet expectations next week. And I fully expect they will be able to say Oz is growing, and I fully expect them to say they have sold x houses in the US and to re-quote that the US market is worth some many bn. And I fully expect them to indicate that they are NOW actively looking at new territories.
This is because the company is a marketing company with a neat idea.

We are agreed that the company has no moat around its business. There are no barriers to entry and they have nothing that cannot be copied, and in the states already is copied.

It is easy to see how innovators enter a market with a cheap product and take 3-4% market share. In my experience it is illogical to think that they can grow from 3-4% to 16% without any reaction from competitors. So I don't believe they will get to 16% of the UK market but actually for my investment decision I have assumed they will!!

Based on house broker forecasts this even in 3 years, with turnover at £230m will only have 10% EBITDA margins - that is lower than a good manufacturer!! And even in three years and after 5 years of trading they will have debt of c.£30m. I assume the model must have c.£30 debt if it is modelling £3m of interest charges.

However in the past people have believed this possible and it is a golden rule that the market can stay higher longer that one can stay solvent.

My investment decision is based on the point that to date the market has valued that very highly and momentum traders have taken the price to stratospheric levels. There is now clear evidence that the vast majority of momentum trade stocks have now fallen significantly (c.25%) from their highs. From my watchlist (c.140 stocks) I known of c.20. The stopping of momentum trading has been reported in FT + the most popular investment journals. So whatever the business achieves my investment is based on the belief that the rating will reduce. It is happening all over the market and there is clear evidence of a head and shoulder chart top with PURP specifically.

PURP is being highlighted in the last week as a technical short in 2 of the 3 broker sites I use. Then you have the negative press. From Allagents to the headlines and comments in the Daily Mail. Then there is Tom Winniforth saying that the value is zero. So more and more people are being critical of PURP. It actually doesn't matter to my investment decision if they are right or not as more will sell (makes perfect sense to lock in their profit). It was interesting that Woodford sold about 10,000 shares last week and the price crashed over 30p!

Obviously I have holder bias,
my position is clear I normally trade long in smaller equities,
but the risk reward in PURP was so unique and potentially so larger from over 1,000 companies I have looked at, I decided to take a short position.
I have a 12 moths view. From the chart there is serious resistance at 420p, though the downtrend will not be broken unless it rises above 450p IMHO.
So as I see it I risk losing 10% - I think this is 20% probability
But the technical , and next support level is 300p - 30% profit
(over 12 months and a 50% probability)

I am intrigued that your posts do not actually encourage anyone to buy before the TU next week. You seem to have access to the figures, you've met the CEO, yet you only have a small % in PURP despite the 300% rise in 9 months and yet your final piece of advice is not that PURP are a share to buy but that I should close my short....

Anyway time will tell see you here in 12 months, or when the price hits 300p, or when it rises above 450p (if i'm wrong i'm wrong). For my investment decision it may not be this trading up, or the next one, but over 12 months I just need one wobble in the market. In fact although I have my position today - if it rises from here (but remains below 450p) I will be increasing my short. And I know of 2 others with the same approach so of course a 10% fall in the price would be nice but a rise in the share price with the TU could provide a 1 in 100 opportunity for my investing strategy.

I see Capita has further very large falls today. it used to be on a premium rating but that has changed over the past 18 months. It has another thing in common with PURP - being the current PURP chairman and Woodford as the biggest shareholder. I accept in advance that this is very much holder bias to think investors will correlate this to PURP but it is another example of how a darling share price of the stockmarket can suddenly be 50% down over 12 months even though it still makes lots profits and is good in its industry.



All, IMHO, DYOR + BoL
PURP is in my top5 (short)

[andy] 21/9/2017 10:09

argentus,

There are some pretty big assumptions there, I think the elephant in the room is the property market itself, which is clearly cooling, and the effect that will have on the business model.

In my experience people hold onto money as tightly as they can, so if property becomes hard to sell and the market grinds to a halt, then how many people will want to gamble £899 when they know selling will be hard/next to impossible?

I have seen evidence in my area of AE's offering a fixed fee, and ultra low commissions so they are already responding to PURP's threat. Add in a sticky market and my bet is it will be dog eat dog, and commissions will slump to gain any business going.

If that scenario proves correct, those earnings estimates may prove very optimistic indeed.