Stock of the day 26/11/2015 – Zoopla Property Group PLC

It hasn’t been smooth sailing for Zoopla since its IPO last June; can it get back on track with its full year earnings release next Wednesday?

2015 immediately got off to a back start for the stock; after opening the year at £1.94 Zoopla quickly fell to an all-time low of £1.52 by January 22nd. Yet the announcement of a new rival, OnTheMarket appeared to spur on the company’s investors, the stock bouncing back 20% in 2 days to £1.92. Another tumble at the start of February was then itself brushed aside by Zoopla’s first trading statement of the year, which showed a 14% increase in January web traffic year-on-year, allowing the stock to hover around £1.90 for a while longer.

Yet as is typical for the Zoopla, the stock found itself trickling lower as February turned into March, dipping below £1.70, only to surge above the £2 as March turned into April. The stock’s roller-coaster ride continued as it fell 30p to £1.80 across the second half of April, before the announcement of Zoopla’s acquisition of price comparison site uSwitch sent it 16% higher in a single day of trading. Combine that with the Tory election win and on the eve of its half year results on May 20th the stock was hovering around £2.30.


(Source: IT-Finance.com 26/11/2015)

Those half year results contained a 23% fall in the number of its agency members as OnTheMarket proved to be a thorn in Zoopla’s side, whilst total member numbers dropped by 16%. However, a 14% increase in adjusted half year earnings to £21.4 million and an 11% jump in visitor numbers helped mitigate the company’s losses, and by the end of May the stock was once again in ascendancy, climbing to £2.76 following a positive update from Jefferies Group.

Bar a brief drop at the start of the month (due to uSwitch being asked to hand over information to Ofgem in relation to an investigation into a breach of competition law) June largely saw the stock continue to rise, reaching £2.82 by the beginning of July. However, a series of sharp movements downwards saw Zoopla plunge back to £2.30 in the first week of that month, before bobbing between £2.40 and £2.50 until mid-August. 

News that the Zoopla’s founder Alex Chesterman had signed a new deal at the company, and a trading update that saw UK agency membership return to growth, quickly pushed the stock to a 2015, and all-time, high of £2.84, only for the well-worn tale of market chaos and Black Monday to spoil the party, sending the stock all the way back to £2 by the end of September. 

Things began to pick up at the start of October, before another trading update, which confirmed that membership growth had continued to recover from its early 2015 slowdown, pushing Zoopla to tickle £2.70 in the aftermath. However, nothing is ever easy with Zoopla, and across November the stock began to fall once again after Liberum Capital reported that it was losing ground to Rightmove, leaving it, despite a Autumn Statement boost, at a current trading price of £2.20 (IT-Finance.com, 26/11/2015).

In terms of its full year figures on Wednesday, Zoopla announced in October it is expecting a 33% increase in revenue to £107 million and a 21% rise in adjusted EBITDA to £48 million. 

Zoopla Property Group PLC has a consensus rating of ‘Hold’ with an average target price of £2.72.