Oh Purplebricks

In the words of Bojo, I think a national conversation needs to be had.

The PURP share price has plummeted because of a paperwork error. It has a flawless balance sheet, and after the drop im wondering if it is now undervalued. Considering in early November the SP was double what it stands at today.

I’m a landlord, and am currently at a loss as to why millions has been wiped off over the error that was made. It seems so minor.
They registered the deposits of tenants in the legal schemes, which they were required to do, they just didnt tell the tenants which scheme it was in. Had the tenants ever wanted to know, which I cant imagine why they would need to during there tenancy which specific scheme their money was being held, then I dont see why they couldn’t have simply asked if they needed to.

In the space of a month, the Share price has more than halved. Has the market over reacted? This little daisy may cost PURP up to 9million, but am not sure that dents their balance sheet too much.

I see it as a potential buying opportunity. Holding fire for now until more news comes forward. But im wondering whether this is an overreaction.

You might be right as now trading near its 30 April NAV, but the company hasn’t been profitable until 2021. In fact it might actually be trading at cash value.

I suspect its reaction to the potential legal bill for breaches in how it should treat user data.
Worth monitoring and a potential good punt.

On further reading they are a bit hooped. Apparently by not disclosing to tenants where there deposits were held in a timely fashion, t tenants up to 6 years ago can claim compensation up to 3x deposits.

That’s a pretty big mistake to make, and raises further alarm bells about how the rest of the business is run as fairly basic!

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This might sound a bit harsh but If Purple bricks where required by law to tell tenants which scheme there were in and failed to do so, then It is not a paperwork error but a breach of the law and as such should face the music.

For decades in the UK, cowboy agencies have constantly looked for means to exploit tenants and despite various laws being enacted overtime to protect tenants some are still breaching the law and finding loopholes even as i type.

Purple bricks might be a reputable company operating in a market where there’s lots of unreputable sharks, the more reason they should know better by differentiating themselves s and ensure the I’s are dotted and t’s crossed.

I don’t see the share price drop as a market over reaction but rather ethical investing coming into play - so i won’t be investing and not trying to persuade anyone tho


Couldn’t agree more.

Not necessarily PB, but in the past:

  • I’ve gone to collect keys to move into a flat, only to find out they had given it away to someone else. I had like 3 days crossover to move. Luckily I found other accommodation.
  • I’ve chased up a deposit that took 3 months to return. Their excuse was their HR person was on holiday. I’m sure that their whole business shuts down when that happens and no new tenants get to move into their flats either! Only when we requested details of the tenant depositary scheme the funds were held at, were we swiftly given the cash in full. If we had known at the time we could claim 3x as much we would.
  • I’ve been charged a reference check fee, later discovering they were banned in Scotland so claimed that back.

The Directors of the company need held to account, unless certain personnel in the firm were purposely cutting corners and hiding it from the business.

I have also done some further reading and found the same thing. Potentially they could face 6 years of tenants claiming back for two thirds of the deposit. That could be quite a hefty bill.
Also makes me wonder what else they’ve missed.

Am still keeping an eye on it, but the wind has suddenly disappeared from my sails.

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