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.
