Zoopla could develop ‘direct to customer’ propositions in wake of £2.2bn takeover bid

Rightmove’s share price is forecast to rise to £53 in the wake of the £2.2bn Silver Lake bid for ZPG.

Yesterday, Rightmove shares closed at nearly £48.

Analysts at Exane BNP Paribas says that Rightmove offers “sustainable double digit structural growth, a rarity in European media”.

The analysis, in a new note to investors, goes on: “Rightmove operates as the UK’s market leading property portal, and one of the country’s most visited websites, charging estate agents a subscription fee to list unlimited inventory (per branch) in an all-you-can-eat model.

“We see Rightmove, underpinned by its must-have status with estate agents, as a key winner from the recent competitive upheaval. Rightmove is also attractively valued relative to international peers.”

Exane has also boosted its target price for ZPG shares to 490p, in line with the Silver Lake bid. Yesterday, ZPG shares closed at 488p.

However, Exane gives Rightmove an ‘outperform’ rating and ZPG a ‘neutral’ rating.

Exane also raises the possibility of ZPG going private.

It notes that Silver Lake plans to make further acquisitions and increase investment in ways “difficult to implement . . . as a listed company”.

Exane continues: “We expect a private ZPG to lead further consolidation of the price comparison space.

“Within property, ZPG’s mergers and acquisition optionality is less obvious to us, but ZPG could potentially leverage its traffic to develop its direct to consumer propositions in our view.”

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25 Comments

  1. JonnyBanana43

    I guess we always knew this would happen. How else will they guarantee revenues? It’s not from agents!

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    1. 1TB

      I personally believe at some point it will be free for agents to list. Just charge for additional products.  Look at the likes of Facebook, Twitter, YouTube etc.  They do not charge core membership, so as to get the data etc free.  They then monitise this.

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  2. PaulC

    Not sure this will happen, too much at stake.

    Agents would leave in their droves and the value of Zoopla is in their revenues.

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    1. smile please

      Ahhh but if you have been reading the OTM stories lately agents are already dropping RM so surely people will not list with Z. 😉

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  3. PepeM

    Be assured one day, perhaps not that far into the future, Agents will be very glad OTM exists. Get on board before it’s too late !

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    1. 1TB

      Be assured one day, perhaps not that far into the future, OTM will not exist.

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  4. Prop_Tech_Guy

    This is such a misleading article that has no facts to support that statement. This headline has purely been designed to stir the pot!

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    1. 1TB

      Property eye seems to of gone a bit more that way the last few months.  Bit disappointing really.  I suspect site and article views are either down, or it’s part of plan to get more site visits.

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  5. AgencyInsider

    Most of the piece is direct quotes from Exane.

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  6. CPestateagentesq

    I still think its insane that Rightmove and its entire value could be wiped out in a week if Agents just said, “you know what, we cant be bothered listing with you”

    I’ve seen it for years where our local paper collected thousands in revenue each week because local agents were all too afraid to drop paper advertising, finally (and only in the last 18 months) have they done so, and you know what, its not made the slightest bit of difference to them (the Agents)…

    Rightmove is nothing without its content and yet Agents continue to complain about it but feed it every single day…

     

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    1. Property Poke In The Eye

      Let all leave Rightmove…..I have.

      Start the Mooooooment.

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    2. 1TB

      Same with agents, so should people looking for property be encouraged to not use agents too?

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  7. Simon Bradbury

    Both Rightmove and Zoopla have always had the opportunity to change their business model and allow so-called “private listings” on their sites. It’s a strategy option that has been suggested by various observers over a number of years.However, like most conspiracy theories it lacks any deep rooted rationale – being based upon flawed logic and facts.

    Personally, and of course I could be wrong, I simply can’t understand why either of the big portals would risk disrupting their own highly profitable businesses for such a venture which would undoubtedly encourage most agents to ditch them within a very short period of time.

    If you owned Rightmove or Zoopla – would you?

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    1. SmartOctopus30

      they don’t need to take private listings (no real value in competing against Gumtree).

      Zillow recently launched iBuyer.  Now vendors can sell directly to Zillow in certain states for cash. In the UK, Nested has the similar model.

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    2. smile please

      If i was Rightmove or Zoopla would i accept private listers now? No.

      But if they feel “Online agency” is the future then the first of those two to market will steal a march on the other.

      I think the one to do it would be Zoopla as they have diversified into so many areas. What you need to look at is share price NOT sustainable business.

      Look at how much PB is supposedly worth. If Zoopla relaunched itself as an online agency they could dwarf the share price of PB over night.

       

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  8. CWoodhouse92

    Personally, I think it’s only a matter of time before a really good offering come to market that will allow vendors to market their properties themselves.   In reality, what do they need to get started?  Professional photo’s, a floor plan and to be one the portals!  I guess an online shared calendar to book viewings.

    I’m sure there is more to it than that but that’s the basics.  It’s not rocket science and as an industry, the future is definitely going to change.  Estate agencies, mortgage brokers & conveyancers need to think hard about what technology is capable of doing today and how the speed of change is only going to get faster.   Don’t be a dinosaur, adapt or die..!

     

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    1. PeeBee

      “Don’t be a dinosaur, adapt or die..!”

      I love it when people chuck this kind of worthless f*ckwittery (credit: Jonnie) into the mix.

      Suggest the poster look up “Cretaceous–Paleogene extinction event” in order to familiarise him/herself with the history.

      THEN – show me the future asteroid I’m gonna be wiped out by.

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    2. 1TB

      You’ve just pretty much described PurpleBricks.

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  9. AgencyInsider

    If (yes, I know, it’s an enormous IF) OTM can get traction it could seriously threaten Z’s portal business. Why do you think Z has been so aggressive towards OTM? If they see their No2 slot eroding then a move to a direct customer offering is not out of the question – especially as agents have always been so full of hot air about what they will tolerate from RM and Z.

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  10. KByfield04

    Zoopla have developed an entire environment built financially around the revenues made from agents and continue to do so. A pivot to a direct to consumer market makes absolutely no business, financial or investment sense. What’s more the implementation of GDPR should have relayed the fears and scaremongering by many of the handling of their/our data. Most sensible thing I have heard is that they plan to roll out across Europe modernising many of the portals & agent crm systems which makes complete sense when you look at what they have achieved with the mobile generation here (over 75% mobile traffic to zoopla) and you look at so many of the outdated portals operating across europe. Can ‘analysts’ who don’t understand the market place stop commenting on it- all this highlights to me is that I wouldn’t want to use them for investment advice!

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    1. 1TB

      I’ve just taken a look, and according to their annual report, 50% of their revenue comes from the comparision side, uSwitch etc.  Do a search yourself, for Revenue breakdown.
      http://www.zpg.co.uk/~/media/Files/Z/Zoopla/documents/reports-and-presentation/zpg-plc-annual-report-2017.pdf

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  11. Robert May

    Oh dear someone doesn’t understand estate agency or more importantly the sort of person capable of being a good estate agent.

    Duty of care and skill will kill any attempt to do away with those agents who are currently a convenient buffer between the random number valuation systems and those who think they are anything more than an arbitrary number.

    As soon as any portal attempts to say your home is worth £xxxxxx and through established precedent  have to take responsibility for the guess they’ve come up with they wander blindly onto the litigation tightrope every good agent negotiates every single day.

    It’s all well and good being a clever dick but if your analysis is going to end up on Eye it really ought to be on the money

     

     

     

     

     

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  12. Property Poke In The Eye

    The bottom line is that people are lazy.

    Even if you could do something yourself We tend not to because it doesn’t excite us.

    Only a few will do the implementation part.

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  13. smile please

    If its that bad why read it?

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  14. Prop_Tech_Guy

    You don’t know an article is going to be bad until you read it. Plus PIE usually writes well supported articles, so this one is just a bit of a dissappointment.

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