Purplebricks suffers share price slump as revenue guidance is slashed and bosses head for the exit
Hybrid estate agency Purplebricks spooked the markets this morning after bosses on both side of the pond departed and the firm slashed revenue forecasts for the year ahead.
The group's share price plunged 35 per cent in early morning trading after Purplebricks announced that UK and US chief executives Lee Wainwright and Eric Eckardt are both set to leave their roles at the helm of the business.
Shares in the company, which has been embarking on a bullish overseas expansion in the last 12 months, are currently trading at 108.5p, marking a sharp drop from highs of 439p almost a year ago.
Purplebricks also said that it expects to post revenue between £130m-£140m in its upcoming results, marking a 20 per cent drop from a previous guidance of £165m-£175m.
Read more: Purplebricks cuts forecasts despite leap in revenue
Listed on the Alternative Investment Markets (Aim), Purplebricks has come under growing pressure after posting widening losses in the summer due to an expansion campaign in the US and Australia.
Today the group said that the “vast majority of short-term investment will be focused on the Los Angeles and Florida markets. As a result of this, the Board does not expect the amount of US revenue to be sufficient to meet its expectations in this financial year.”
Headwinds in Australia also meant that the” anticipated amount of recognisable revenue will not be sufficient to meet expectations for this financial year.”
Read more: Purplebricks posts revenue growth despite 'challenging' market
The group also said that the UK housing market “has continued to be challenging for the estate agency industry”, although the board still expects to report UK revenue for the current financial year of approximately 15-20 per cent above the previous year.
Founder and group chief executive Michael Bruce is to take on day-to-day management of the US business with immediate effect, Purplebricks said.
In a statement this morning Bruce said: "Although there are macro and industry headwinds across markets we are well placed to capitalise on the significant opportunity for growth that exists in each country, albeit not entirely as we would have wanted before our year end."