Opendoor Technologies (OPEN) faced years of heavy losses and even a delisting threat before suddenly becoming a meme stock. The real estate company’s shares surged 460% in just a few days, which gave CEO Carrie Wheeler a rare opportunity to reshape its image. Indeed, according to Bloomberg, Wheeler now hopes to transform Opendoor from a pure home-flipping business into one that offers multiple selling options for homeowners. “We want to make sure we harvest this moment,” she said while referring to the unexpected surge in attention.
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It is worth noting that Opendoor recently reported adjusted EBITDA of $23 million for the second quarter, its first profit by that measure in three years and ahead of analyst expectations. However, the company projected up to $875 million in revenue and an EBITDA loss of as much as $28 million for the third quarter, which missed estimates. As a result, shares are down in today’s trading. Interestingly, Opendoor pioneered the “iBuying” model of using software to purchase and flip homes quickly, which was a strategy that thrived during the pandemic but fell apart as interest rates rose and housing sales slowed.
In fact, the company was once acquiring 5,000 homes a month, but scaled back dramatically after losing money on 42% of transactions in mid-2022. Now, with revenue down to $1.6 billion from over $3 billion two years ago, Wheeler is shifting Opendoor’s strategy to go beyond home-flipping. For example, the company is working more closely with real estate agents so sellers can compare cash offers with traditional listings and has introduced “Cash Plus,” which pays sellers a lower upfront price but gives them a share of resale profits.
Is OPEN Stock a Good Buy?
Turning to Wall Street, analysts have a Hold consensus rating on OPEN stock based on one Buy, four Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average OPEN price target of $1.05 per share implies 47.2% downside risk.
