Meme stock Opendoor Technologies (OPEN) faced yet another rating downgrade, with KBW (Keefe, Bruyette, & Woods) analyst Ryan Tomasello revising his rating to Sell from Hold. The analyst maintained his price target at $1. Earlier this month, analysts at Zelman & Associates and Citi downgraded the stock of the residential real estate platform in response to dismal Q2 results. KBW’s downgrade is based on expectations of widening losses in the second half of the year and an elevated valuation.
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The meme stock enjoyed a tremendous rally in July, just when it was grappling with a potential delisting and mounting losses due to weakness in the housing market amid a high-interest-rate backdrop. However, Opendoor disappointed investors by reporting a wider-than-anticipated Q2 loss and issuing a disappointing third-quarter outlook. The company expects to acquire just 1,200 homes in the third quarter, down from 1,757 in Q2 2025 and 3,504 in Q3 2024.
KBW stock has rallied 217% over the past month and is up 54% year-to-date.
Here’s Why KBW Downgraded OPEN Stock
In reaction to the weak Q2 performance, Tomasello lowered his 2025 and 2026 non-GAAP Earnings Per Share (EPS) estimates to -$0.27 and -$0.22 from -$0.21 and -$0.14, respectively. He also slashed his EBITDA (earnings before interest, tax, depreciation, and amortization) estimates for these two years. The analyst noted that Opendoor’s guidance for H2 2025 revenue was about 40% below the consensus estimate.
Tomasello also highlighted that Opendoor outlined a strategy pivot to an agent-led distribution model. The analyst turned bearish on OPEN stock as he expects widening losses in the second half of 2025. He also expects uncertainty from the strategy pivot to weigh on OPEN stock, which is trading near the high end of historical multiples.
Is OPEN Stock a Buy or Sell?
Currently, Wall Street has a Moderate Sell consensus rating on Opendoor Technologies stock based on one Buy, three Holds, and four Sell recommendations. The average OPEN stock price target of $1.27 indicates a downside risk of 49% from current levels.
