TLDR
- OPEN stock surged 500% in three months after professional investor Eric Jackson claimed 100x potential and sparked retail buying interest
- Interim CEO Shrisha Radhakrishna purchased 30,000 shares, marking first insider purchase since December 2021
- Company launched Cash Plus feature where Opendoor provides cash advances on homes and shares profits with sellers
- Revenue grew 4% year-over-year but gross margin compressed to 8.2%, resulting in continued net losses
- Wall Street analysts maintain Sell rating with average price target of $1.02, implying 77% downside from current levels
Opendoor Technologies stock has experienced one of the most dramatic turnarounds in recent memory. The digital real estate platform went from trading below $1 per share to nearly $5 in just three months.
The rally started when professional investor Eric Jackson began buying OPEN shares in July. Jackson claimed the stock had 100x potential from its then-price below $1 per share.
His large social media following helped spread the investment thesis across retail forums. The once penny stock went on an absolute tear, likely experiencing several short squeezes along the way.
Jackson and other investors believe Opendoor is undervalued due to reduced competition in the iBuying market. The iBuying business model involves platforms buying homes directly from people and flipping them at higher prices.
This strategy hit a wall when home price appreciation stagnated in 2022. Opendoor lost substantial money during this period.
Leadership Changes Drive Confidence
The company recently underwent a leadership transition that has energized investors. CEO Carrie Wheeler resigned from her position in mid-August.
Shrisha Radhakrishna, the current Chief Technology Officer, took over as interim leader. The company and retail activists are searching for a permanent replacement.
Radhakrishna made headlines by purchasing 30,000 shares of OPEN stock. He bought 28,400 shares at $4.27 each and 1,600 shares at $4.42, totaling $128,340.
This purchase increased his stake to 4.28 million shares. The move represents the first insider purchase since December 2021.
Such insider buying often serves as a bullish signal for investors. It suggests key executives remain optimistic about the company’s future direction.
New Features Aim to Drive Growth
Opendoor is expanding features for buyers, sellers, and real estate agents using its services. One new offering is called Cash Plus.
Under this program, Opendoor gives sellers cash advances on their homes. The company then fixes up the properties and sells them on the open market.
If Opendoor sells the home at a premium, it shares a bonus with the original seller. This approach can reduce Opendoor’s inventory depreciation risk while creating more flexibility for shoppers.
Radhakrishna is steering the company’s transition from a pure iBuying platform to an AI-powered, multi-product ecosystem. He describes AI as a “core building block” for Opendoor’s next growth phase.
The company will need continued innovation because its current financials remain weak. Last quarter, revenue grew 4% year over year.
However, gross margin compressed to just 8.2%, leading to another net loss. The company projects another net loss for the upcoming quarter.
Opendoor has posted a $300 million net loss over the last 12 months. The company has never generated a profit, even during the 2020-2021 housing boom.
Last quarter, 33% of Opendoor’s gross profit went to interest expense on debt. This occurred while inventory levels were actually depleting.
Despite the stock’s recent surge, analysts remain bearish on OPEN. Wall Street maintains a Sell consensus rating based on one Buy, two Holds, and five Sells.
The average price target sits at $1.02 per share, implying 77% downside risk from current levels. Analysts cite doubts about the rally’s sustainability given profitability struggles and high operating costs.
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