TLDR
- Opendoor stock fell 15% Tuesday despite massive 367% year-to-date gains and 268% annual returns
- Eric Jackson, who sparked the meme rally, promoted Better Home Finance as his new “100-bagger” pick
- Real estate consolidation intensifies with Compass acquiring Anywhere Real Estate for $4.2 billion
- Robinhood CIO says digital real estate stocks could benefit from falling mortgage rates
- Stock remains volatile with 23% drop from recent peak highlighting meme stock risks
Opendoor Technologies stock tumbled over 15% Tuesday as the digital real estate company faced headwinds from multiple fronts. The decline came despite the stock’s remarkable 367% year-to-date performance.
The selloff appeared triggered by hedge fund manager Eric Jackson’s latest social media post. Jackson, who previously sparked Opendoor’s meme stock rally by comparing it to Carvana, announced a new investment pick.
Jackson promoted Better Home Finance Holding as the “Shopify of mortgages.” He predicted the company could deliver 100x returns for investors.
Better Home Finance surged 32% following Jackson’s endorsement. Trading volume exploded to 7 million shares versus its typical 83,000 daily average.
Some Opendoor investors likely sold positions to chase Jackson’s newest recommendation. This profit-taking contributed to Tuesday’s decline.
Real Estate Industry Consolidation Heats Up
The second pressure point came from industry consolidation news. Compass announced plans to acquire Anywhere Real Estate in a $4.2 billion transaction.
This deal creates the largest U.S. residential real estate brokerage. The merger poses competitive challenges for Opendoor’s direct home-buying model.
Opendoor aims to disrupt traditional real estate by purchasing homes directly from sellers. The company renovates properties before reselling them to new buyers.
The Compass-Anywhere combination shows established players aren’t sitting idle. Traditional real estate firms are adapting to industry changes through strategic consolidation.
Digital Real Estate Outlook Remains Mixed
Robinhood Markets chief investment officer Stephanie Guild discussed digital real estate prospects on Yahoo Finance. She believes companies like Opendoor remain relevant despite current losses.
“They’re not going to go away,” Guild stated. She emphasized the importance of understanding these companies’ strategies.
Guild pointed to improving interest rate conditions as a potential catalyst. Current 30-year mortgage rates hover around 6.36%, but they’re slowly declining.
Many homeowners with historically low rates remain “frozen” in their current properties. This limits housing supply and market mobility.
Expected Federal Reserve rate cuts could unlock more housing activity. “These are companies that should benefit from increased activity,” Guild explained.
However, she cautioned investors about elevated valuations. Stock prices have risen substantially despite operational challenges.
Volatility Continues for Meme Stock
Opendoor’s extreme price swings have become commonplace. The stock dropped 23% from its recent intraday peak, illustrating meme stock volatility.
Double-digit daily moves reflect both retail speculation and fundamental business uncertainties. New management continues developing turnaround strategies.
The company still loses money operationally. However, analysts expect smaller losses in coming years as the business model evolves.
Opendoor closed at $7.09 per share Tuesday. Pre-market trading Wednesday showed a 2.4% rebound to $7.25.
The broader real estate sector faces mortgage rate headwinds. Digital real estate companies experience particularly uneven performance as they navigate market challenges.
