After raising less money than desired and taking six months to reach the stock market after announcing its plans last summer, property portal OnTheMarket (OTMP:AIM) tops off its woes with a miserable start to life as a listed company.
Its shares were issued at 165p but on its stock market debut today (9 Feb) the stock has fallen 6.7% to 154p. New figures from research group Edison show the business is forecast to rack up heavy losses over the next two years before achieving profitability in the financial year to January 2021.
WHAT THE COMPANY DOES
OnTheMarket was set up to challenge the market duopoly of Rightmove (RMV) and Zoopla, owned by ZPG (ZPG). It was founded by a group of estate agents as an alternative route to market, offering member agents access to potential house buyers at a significantly lower cost than Rightmove and Zoopla.
The company wanted to raise £50m but only managed to secure £30m which will be used to invest in sales and IT, expand the product offering and fund a marketing plan to build awareness and recruit agency groups.
‘The outward-facing offer appears to the property buyer as fairly similar to those of the two market leaders,’ says Edison.
‘However, the business case differs in that it rests on the system being designed to provide agents (the suppliers of the inventory, without which there is no content) with a fairly priced service, whilst still developing a profitable growth business and a platform for ongoing revenue development.’
Edison says the key difference between OnTheMarket and its rivals is its ‘new & exclusive’ inventory, displayed at the top of the listings. ‘Although this is not a contractual obligation for agents, it is in their interest to grant exclusivity to OnTheMarket before the properties are released to other portals (at higher charges).
‘It also gives a clear incentive for seriously interested potential buyers to visit the website and to set up alerts aligned to their requirements (as opposed to much of the website traffic, which is simply taking an interest).’
DRIVING THE BUSINESS
The business is run by chief executive Ian Springett who joined in April 2013. He founded PrimeLocation.com in 2000 and led its growth until it was sold to DMGT in 2006.