What happened to Domain Holdings Australia Ltd?

The Fairfax Media Limited (ASX: FXJ) spinoff of its property arm, Domain Holdings Australia Ltd (ASX: DHG), led to one of the ASX’s most exciting Initial Public Offers last year.

But so far Domain shareholders are yet to enjoy returns that many were expecting.

In November last year Domain shares were trading at a high of $3.69 but have since shed about 12% after changing hands for around $3.24 on Wednesday.

In contrast, REA Group Limited (ASX: REA), the other major ASX listed digital real estate advertiser, has seen its share price go from about $77 in November last year to close at $81.36 on Wednesday, representing a gain of about 5.6% over the above mentioned period.

So what went wrong with Domain?

Domain announced in February in its half year results presentation that revenue was up by 12.5% to $183.3 million while NPAT was down 8.1% on the previous year at $24.7 million.

A glance at the results suggests an increase in expenses of 14.2% to $125.9 million provides some explanation for the discrepancy.

A major management shakeup also saw the appointment of Jason Pellegrino as Managing Director and CEO as the replacement of Antony Catalano. This could point to another problem.

Australia’s dwindling property prices could suggest yet another reason, with potential sellers opting to hold or delist properties from the market rather than crystallise losses.

The fact that REA has managed slight returns rather than losses for its shareholders may support rather than refute the previous assertions.

REA also has greater exposure to international markets and as such may not be as volatile to domestic whims as its competitor Domain.

While a number of factors have hit the Domain share price, the picture of Australia’s digital property advertisers should soon be clearer with REA expected to release its full year results on Friday.

But so far at least, Domain has failed to live up to the expectations of many and market leader REA still looks like the pick for investors seeking exposure to the digital real estate advertising space.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Atlassian.

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor Steve Holland has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!