Domain has strong stock market debut following Fairfax split
Domain’s first day on the Australian stock market as a stand alone business was a success with the company finishing trading at $3.90 a share, valuing the venture at slightly over two billion dollars.
Fairfax went ahead with a market split of the Domain property listing business after the company rejected a series of offers for the division earlier this year. Recently the site has moved into business journalism as well as events and training as it looks to broaden its revenue and audience bases.
Domain CEO Antony Catalano
With the book values halved following the split, Fairfax had a brutal start on the ASX today with shares falling at the morning’s opening from 80c to 69c, a fall of nearly 14% although they recovered to 74c by the end of the day.
Fairfax’s shares have fallen from $1.06 this week as the split approached. However, the good news for Fairfax shareholders is having been given one Domain share for every ten they held in the old company, the combined value of shares is $1.13, putting them slightly ahead.
REA Group, Domain’s competitor, also had a strong day finishing up at $77.01, up from yesterday’s close of $76.25. Majority News Corp owned REA remains far larger than Domain with a ten billion dollar market cap, almost five times it’s smaller rival.
Domain also revealed to the stock exchange today it had taken a 740,000 share cross-holding in its former parent, which still holds 60% of the real estate listing company’s stock.
Now Fairfax is financially Siamese twins. You have to add an unwanted twin to a desirable twin to get an acceptable result. But twin Number 1 is certain to be unwell if not terminally ill. The real test is whether Domain is really fit to stand alone. Me, I doubt.
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This will be a repeat of the McGrath float.
Once the peak property porn-era dissipates, the Domain business is dead in the water. The real disruption to property will come (most likely in a prolonged downturn) when someone decides agents, in most instances, are largely overhead and removes them from the property marketing equation entirely.
Domain needs to maintain the status quo and cannot be a disruptive player as its revenue is almost entirely derived from agents.
That’s why its business is not a long term bet for success.
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@investor @another investor
I can see some HUGE potential for Domian. Firstly, from a users perspective, it is great. It’s app sh1t’s all over REA’s, (just read the reviews in the app stores.) I am confident it would wear well against other competition, in other countries*.
(* This is the exciting part for me.) Murdoch (REA in Australia) owns property search businesses in the US, UK. Domain isnt in those markets, yet… If they expand and the offering flies, then the share price might turn into a favourable stock. The team at Domain are great. If they do scale internationally, (they should do), they need to hire the right people. Do that right and the world is their oyster.
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There are certainly some uneducated investors out there!
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We all look forward to Domain launching in the UK because there’s no one who does this kind of thing there. At all. So it will be easy.
On the positive side, it would be nice to see Domain expand abroad as Fairfax could have launched The Age across the world but instead sat and watched as BBC, The Guardian and others sailed over to eat their lunch.
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There certainly are hmmmm! A lot of them jumping out of a frying pan and into a fire I reckon.
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