Purplebricks tanks after profit warning

Purplebricks shares tumbled on Thursday after the online estate agent warned that full-year earnings will be below previous guidance as new instructions have slowed "significantly" in recent months.

In an update for the six months to the end of October, the company said that after an exceptionally strong period for the UK housing market in 2021, buoyed by the stamp duty holiday, trading has been more challenging.

"New instructions have slowed significantly in recent months, given continued strong demand across the housing market is not being met by sufficient supply of instructions," it said.

As a result, new instructions coming to market are down around 23% versus the same period a year ago. Purplebricks said instructions for the six-month period are expected to fall to around 22,000 from 35,387.

"Going forward, uncertainty remains regarding the imbalance of supply and demand in the housing market and given the disruption caused by the business transformation, we expect this dynamic to continue into the second half of the financial year, impacting new instructions for the full year," it said.

"The cost guidance provided with the group's update on 10 August 2021 remains unchanged, and therefore adjusted EBITDA is expected to be below previous guidance."

At 0920 GMT, the shares were down 33% at 35.21p.

Broker Peel Hunt, which rates the shares at 'buy', cut its EBITDA forecast for the year to a loss of £2.5m from a profit of £12m previously. It now expects a pre-tax loss of £12.4m versus a £1.2m profit before.