OnTheMarket, a property portal that aims to challenge Rightmove and Zoopla, has suffered a disappointing debut on London’s Alternative Investment Market (AIM).
The company, which was launched in 2015 by a group of estate agents, issued its shares at 165p on Friday but closed down 9% at 148p. The stock was trading at just 141p on Tuesday morning.
It comes after the company revealed last month that it had raised just £30 million ahead of its stock market listing – some £20 million less than its original goal.
OnTheMarket’s founders – including Savills, Douglas & Gordon, Strutt & Parker and Knight Frank – launched the company in response to “widespread agent dissatisfaction with the two existing major portal groups, Rightmove and ZPG”.
The portal’s website states: “Our key proposition remains the creation of an agent-backed, full-scale property portal to disrupt what is otherwise a duopoly by offering a premier search experience to property-seekers whilst charging sustainably fair prices to agents.”
OnTheMarket, which was previously run under a mutual structure owned by members of Agents’ Mutual, plans to triple the number of branches that advertise through it.
It is far less than sales at its competitors. ZPG, the owner of Zoopla, reported full-year revenues of £122.3 million for price comparison sites in its property division, while Rightmove, with a market capitalisation of £3.9 billion, made revenues of £120 million for the first half of 2017.
Edison was quoted by Shares as saying: “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).”
OnTheMarket was taken to the UK’s competition tribunal last year after Gascoigne Halman took issue with its requirement that agents listing on its site only choose one additional venue out of Rightmove and Zoopla. Although the tribunal ruled in OnTheMarket’s favour, it has since dropped the requirement.
Alastair Stuart, analyst at Stockdale, told the FT there would be an “interesting dynamic” over the next few years as estate agents choose which online listing sites they use.
“We believe OTM’s offering is aligned with the interests of agents and should win significant market share,” added Stuart.
DealMakerz thinks it will be extremely difficult for OnTheMarket to catch up with its bigger and more well-known rivals, especially in today’s tough market environment.
However, its lower-cost model could appeal to traditional agents whose commission rates are coming under pressure from the rise of online agents.