TLDR
- Opendoor stock plummeted as much as 13% Wednesday, giving back gains from a 500% retail-driven rally over recent months
- CEO Carrie Wheeler stepped down last week under pressure from activist investors Eric Jackson and Anthony Pompliano
- Q2 earnings beat estimates with $1.57 billion revenue, but weak Q3 guidance disappointed analysts who expected much higher numbers
- Analyst downgraded stock to Underperform with $1 target, citing concerns about the company’s pivot to agent-led model
- Anthony Pompliano defends the stock against “meme stock” labels, calling retail investors a “decentralized hedge fund”
Opendoor Technologies stock crashed Wednesday as investors dumped shares following weak quarterly guidance and leadership turmoil. The real estate technology company saw its share price fall as much as 13% during trading.
The selloff marks a sharp reversal for a stock that had surged over 500% in just two months. That rally was fueled by retail investors and activist pressure that ultimately forced out the CEO.
CEO Carrie Wheeler stepped down last week after mounting pressure from activist investor Eric Jackson and crypto entrepreneur Anthony Pompliano. The leadership shake-up came just as the company reported mixed quarterly results.
Chief Technology and Product Officer Shrisha Radhakrishna now serves as interim CEO. The board is working with Spencer Stuart to find a permanent replacement.
Wheeler will stay on as an advisor through the end of the year. Her departure marked the end of her efforts to stabilize the company after massive losses in 2022.
Earnings Beat But Outlook Disappoints
Opendoor reported second-quarter revenue of $1.57 billion, beating analyst estimates of $1.50 billion. The company posted a one-cent-per-share loss, matching forecasts.
The company achieved its first quarterly profit since 2022 with adjusted EBITDA of $23 million. This marked a turnaround from previous quarters of heavy losses.
However, third-quarter guidance fell well short of expectations. Management projected revenue between $800 million and $875 million, far below the $1.22 billion analysts expected.
The company also forecast an adjusted EBITDA loss of $21 million to $28 million for the current quarter. This disappointed investors who had hoped for continued profitability.
Keefe, Bruyette & Woods analyst Ryan Tomasello downgraded the stock to Underperform with a $1 price target. He slashed his forecasts for 2025 and 2026, expecting wider losses and deeper deficits.
Tomasello noted that management’s revenue outlook was about 40% below consensus estimates. He cited concerns about weakening demand and delayed margin recovery.
Defense Against Meme Stock Label
Anthony Pompliano pushed back against critics calling Opendoor a meme stock. He described retail investors as a “decentralized hedge fund” that identifies opportunities and advocates for company improvements.
Pompliano highlighted how retail investors sent hundreds of product suggestions to Opendoor executives. They also provided feedback on company communications and helped identify potential merger opportunities.
The crypto entrepreneur pointed to Wheeler’s resignation as proof of retail investor power. He noted that a CEO of a multi-billion dollar public company quit in response to retail pressure.
Eric Jackson, the hedge fund manager who led the activist campaign, also rejected the meme stock label. He called Opendoor “a real business” and expressed interest in creating a “mini-Berkshire” for retail investors.
The stock trades at around $3.22, down about 34% from its 52-week high of $4.97. Despite the recent decline, shares remain well above the 52-week low of $0.51.
The company’s pivot to an agent-led business model has created uncertainty among analysts. This shift represents a change from its previous direct home-buying approach.
Broader market concerns about inflation and AI valuations also weighed on growth stocks Wednesday. Recent economic data showed higher-than-expected inflation levels that spooked investors.
