Purplebricks opens rift with Jefferies after shares plunge
Shares in the firm tumbled over 7% on Thursday after Jefferies issued its research note.
Purplebricks has blamed analysts at Jefferies for a collapse in its share price as the online estate agent refuted details contained in a research note issued by the broker.
Shares in the firm tumbled over 7% on Thursday after Jefferies said that Purplebricks does not disclose how many homes it sells, and questioned its claim of selling 88% of listed homes within 10 months.
The note, authored by Anthony Codling and Sam Cullen, read: “Our research sample found that it had sold 51.6% of the homes listed in November 2016 within 10 months, a similar success rate to the overall market, but below the company’s claim of 88%.
“A review of Purplebricks’ accounting policies raises concerns to us that either its contractual obligations to its customers end with their home being listed on the major property portals or that revenue may have been overstated and deferred income provisions understated in its audited accounts.
“Should the model stumble, the share price may do likewise.”
But Purplebricks hit back on Friday, saying it “firmly refutes the criticism”.
It argued that Jefferies’ data is based on a single month and does not include properties that have completed but have yet to be uploaded to the Land Registry, which can take “several months”.
Purplebricks reiterated its most recently published sales conversion rate from instruction to sale agreed of 78%, which it said more accurately reflects its sales performance.
Shares were down 5% in morning trading to 4.28p.