The Motley Fool

The Purplebricks share price has sunk 60% in 2018! Will it rebound in 2019?

Image source: Getty Images.

Online estate agency Purplebricks Group (LSE: PURP) was once viewed as one of the hottest growth tickets in town, but 2018 has proved to be a potentially-defining year for the company for all the wrong reasons.

Its share price has fallen a whopping 62% in the year to date, and it’s now trading at its cheapest for two years. I can see plenty of reason to expect Purplebricks’s descent to extend well into 2019 too.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

UK homes market to worsen?

For one thing, the Brexit-related turmoil that’s whacking the UK property market looks set to run until well into the first quarter of 2019 and possibly beyond.

Prime minister Theresa May’s so-called meaningful vote on her deal with the European Union has been kicked into the long grass and, as I type, no advice on the timing of a rescheduled vote has been given by Number 10 except that it will be held some time before January 21.

Will May still be in power by then, or even by the end of this week? Does it make the chances of a no-deal Brexit more likely?

The uncertainty that is crushing homebuyer activity in the UK looks set to linger for some time yet, threatening to push Purplebricks’ share price further south. And if the worst-case-scenario, withdrawal without a deal, occurs then the property market could be in the doldrums for many years, the Bank of England suggesting that property prices could tank by more than a third under such a scenario.

International mystery

Whilst a concern for Purplebricks investors in 2018, this has not been the main source of angst for them. Indeed, its solid trading update of a month ago has relieved some of the tension surrounding the company’s British marketplace in the coming year.

What’s been more of a worry is that the small-cap’s international expansion programme may fall well short of expectations. And as my Foolish colleague Graham Chester pointed out recently, that market statement I just mentioned shed no further light on the progress of its foreign divisions. Interims which are scheduled for later this week (Thursday the 13th, in fact) will therefore make for interesting reading.

Concerns that Purplebricks is running before it can walk and expanding much too quickly are nothing new, yet the Solihull-based business has continued to thumb its nose at those critics. Indeed, in October it entered into a joint venture to acquire a stake in German digital estate agent Homeday, which followed shortly after the acquisition of Canadian operator DuProprio for almost £30m earlier this year.

City analysts aren’t expecting Purplebricks to break into profit until the next fiscal year, the 12 months to April 2020, at the earliest. It’s yet to prove that it can replicate its success in the UK in its other territories of the US and Australia, so why is it still spending like it’s going out of fashion?

Despite the 2018 share price slide, the estate agent still trades on a huge P/E ratio of 72.4 times for fiscal 2020. This leaves plenty of scope for additional weakness in the months ahead, and for this reason I believe it should be avoided. 

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.