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Scooter

Rightmove Flotation

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The FT is reporting that Rightmove is to be floated at a proposed value of £300-400m, estimated by ABN. Their profits for the previous half year were £3m. Call me old fashioned but giving a company a notional capital value based on annual earnings projected forward for two thirds of a century seems a bit bizarre. A P/E of 10-15 for a genuine growth business (not that I am convinced it is) might be more like it. No doubt last years BTL punters will love it though... :rolleyes:

Sorry, header should read 66 times annual earnings, not 100.

Edited by Scooter

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I believe they have fingers in other pies, such as being in a prime position to become suppliers of HIPs (Home Information Packs). That could be a very lucrative market as selling costs rise.

Saying that, I wouldn't be tempted at that price.

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Many estate agents use RightMove reluctantly - because it is owned by the big corporates - Countrywide, Halifax and Connells.

I think ultimately RightMove has failed - it still only has about half the market and the estate agency 'profession' as a whole has failed to grasp the opportunity to make sure that every property for sale in the UK can be found through one portal.

As it is there are dozens of them - and, as someone else pointed out, many of them are much better than RightMove with links direct into the agent's site and (PropertyFinder I think) one or more of them have really natty mapping stuff that puts a little flag on a map where each property is.

Rightmove is, generally, pretty crappy. You ought to be able to drill down to the full details on each agent's web site.

I would say that to find a property in any particular town - it is still easier to ring all the agents in the town and register with them. Doing it on the web is painful - you have to register with dozens of portals and each agent's own web site - some of which are very good - some of which are poor.

Edited by Marina

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It'll be a lovely stock to 'short' though. :)

It could be a great proxy for a residential property share index. I would short this massively but you'd need to wait for a while to seee where its post float trading range settled down at - then go for it.

How do they make money? fees/commissions from advertisers (ie estate agents/mortgage cos?) if so its not well insulated from the HP market. What is their business plan for topline revenue growth?

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I prefer primelocation as it has all the land registry info to hand. Apparently however, it is only the 4th largest according to one of the EA's we interviewed - but they weren't on it!

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The FT is reporting that Rightmove is to be floated at a proposed value of £300-400m, estimated by ABN. Their profits for the previous half year were £3m. Call me old fashioned but giving a company a notional capital value based on annual earnings projected forward for two thirds of a century seems a bit bizarre. A P/E of 10-15 for a genuine growth business (not that I am convinced it is) might be more like it. No doubt last years BTL punters will love it though... :rolleyes:

Sorry, header should read 66 times annual earnings, not 100.

I think a P/E of 66 would be quite reasonable for a strong growth prospect. A P/E of 10-15 would be more what you'd expect for a large and solid but boring company.

Do people think that Rightmove has a lot of growth coming its way? This will be a fascinating IPO. If the IPO bombs or severely fails the capitalization target I think that is a very bearish signal.

frugalista

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I think a P/E of 66 would be quite reasonable for a strong growth prospect. A P/E of 10-15 would be more what you'd expect for a large and solid but boring company.

I wonder what the growth rate is expected to be? I suspect it must be substantial. They could not float at 66x otherwise.

The current P/E is immaterial. Investors will be looking at the P/E a year or two out, and the growth rate to make their decision.

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if the IPO goes through at 66x. It can only be because the institutions feel there is still some decent easy upside to go.

I would expect big plans for consolidation. So that you would get to see one portal for house searches/sales for the whole country. Then you have a freemarket monopoly.

As others have mentioned all the new Packs that they will charge for as well.

Y Packs x £x charge per pack x average number of transactions in a year.

paying 66 times where you see earning sdoubling a few years ahead for a couple of years might make sense.

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I think a P/E of 66 would be quite reasonable for a strong growth prospect. A P/E of 10-15 would be more what you'd expect for a large and solid but boring company.

Do people think that Rightmove has a lot of growth coming its way? This will be a fascinating IPO. If the IPO bombs or severely fails the capitalization target I think that is a very bearish signal.

frugalista

15 may be conservative but 66 is a joke. I suppose I find it hard to believe in that sort of growth for a business relying on advertising from EA's and unproven sellers packs.

Edited by Scooter

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15 may be conservative but 66 is a joke. I suppose I find it hard to believe in that sort of growth for a business relying on advertising from EA's and unproven sellers packs.

I also find it hard to believe. But plenty of companies have IPO'd at this ratio and higher. It will be interesting to see what the analysts and institutions think, they tend to do more due diligence than the average armchair house-price pundit.

frugalista

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I also find it hard to believe. But plenty of companies have IPO'd at this ratio and higher. It will be interesting to see what the analysts and institutions think, they tend to do more due diligence than the average armchair house-price pundit.

frugalista

You would think so but I remember lots of crap internet companies being punted to the public at outrageous multiples. The bankers private (genuine) views only came out in court later on...

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Rightmove's plans to dominate the HIPs market make me smile.

'Hello Mr and Mrs Punter, I'm from one of the estate agents that own Rightmove. We earn revenue from the other estate agents that use our portal. And, we earn revenue from them using our HIPs service. Because of this other agents are effectively subsidising the HIPs service we can offer you. So, to you Mr and Mrs Punter we can do a HIP for £250 - whereas the independents in the town will be charging you £600.'

We all know estate agents, collectively, are the most stupid group of people. Will they really be stupid enough to buy into this?

The big corporates are convinced HIPs will allow them to put the independents out of business.

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  • 336 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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