TLDR
- Stock surged 68.7% this week reaching $3.21, driven by meme stock momentum and high short interest at 23%
- Company announced CEO Carrie Wheeler’s retirement and search for new leadership
- Q2 earnings beat expectations with $1.6B revenue and first adjusted EBITDA profitability since 2022
- Met Nasdaq minimum bid price requirement, securing listing on Nasdaq Global Select Market
- Business model fundamentals remain challenging with $300M net loss over last twelve months
Opendoor Technologies stock exploded this week. Shares jumped as much as 81% before settling at a 68.7% weekly gain to close at $3.21 on Friday.
The real estate platform became the latest meme stock darling. High short interest of 23% attracted retail investors looking for a squeeze play.
Social media buzz and endorsements from high-profile investors fueled the rally. Trading volume spiked well above the normal average of 198 million shares.
The company helped its own cause by announcing CEO Carrie Wheeler’s retirement. The search for new leadership excited investors hoping for a strategic turnaround.
Wheeler’s departure timing remains unclear. The announcement came just as meme stock momentum was building around the stock.
Opendoor also met Nasdaq’s minimum bid price requirement this week. This secured its listing on the Nasdaq Global Select Market and removed delisting concerns.
The stock nearly tripled from recent lows around $1. But it’s still down 90% from 2021 highs when SPAC mania pushed shares near $40.
Financial Performance Shows Mixed Results
Recent earnings provided some bright spots for bulls. Q2 revenue hit $1.6 billion, beating the $1.5 billion consensus estimate.
More importantly, the company achieved its first adjusted EBITDA profitability since 2022. This milestone came despite a challenging housing market.
However, the underlying business still struggles. Net losses totaled $29 million last quarter and $300 million over twelve months.
Gross profit margins remain thin at just 8.05%. The company made only $128 million in gross profit on $1.6 billion in revenue.
Revenue has declined 30.51% over three years. The current $5.15 billion annual run rate is well below peak levels.
The company’s debt-to-equity ratio of 3.46 shows heavy leverage. But a current ratio of 4.4 indicates decent short-term liquidity.
Business Model Challenges Persist
Opendoor’s iBuying model involves purchasing homes, renovating them, and reselling at higher prices. It’s essentially home flipping at scale.
The model requires huge amounts of capital to finance home purchases. This creates financing constraints that limit growth potential.
Rising interest rates make the debt financing more expensive. Home price volatility adds risk to the profit margins on each transaction.
The company has never generated positive net income since going public. Scaling the business profitably has proven difficult.
Competition from traditional real estate agents and other iBuyers adds pressure. Market share gains have been hard to achieve.
UBS maintains a cautious outlook on the stock. Analysts point to structural challenges in the business model.
Technical analysis shows the stock broke above $3.22 resistance this week. Traders are watching for a pullback to the $3.13 support level.
The current price-to-sales ratio of 0.35 reflects market skepticism. Investors question whether operations can turn consistently profitable.
Recent trading patterns show strong bullish momentum from $2.31 to $3.22. Volume supported the price advance throughout the week.
Opendoor announced Friday that Wheeler will step down as CEO while the board searches for a replacement.
