TLDR
- Opendoor Technologies reports Q2 earnings after market close on August 5, with analysts expecting flat $1.50 billion revenue
- Stock has surged 280% in the past month due to meme-stock momentum but remains down 12.5% year-over-year
- Company historically experiences high volatility following earnings reports, with more frequent sell-offs than gains
- Management guided for Q2 sales between $1.45-$1.525 billion and contribution profit of $65-75 million
- Current forward P/S ratio of 0.3 suggests stock trades at just 30% of expected annual sales
Opendoor Technologies faces a critical test on August 5 when it releases second-quarter results after market close. The real estate services company has become a favorite among meme-stock traders recently.
The stock has jumped more than 280% over the past month despite pulling back from recent highs. This surge helped the company delay a reverse stock split vote that might have been needed to maintain Nasdaq listing requirements.
Analysts expect revenue to remain flat year-over-year at $1.50 billion for the quarter. This would represent an improvement from the 23.5% decrease recorded in the same quarter last year.
The company previously guided for Q2 sales between $1.45 billion and $1.525 billion. Management also projected contribution profit between $65 million and $75 million.
Historical Volatility Pattern
Looking at past performance, Opendoor has experienced high levels of price swings following earnings announcements. The company’s quarterly reports have more often triggered substantial sell-offs rather than gains.
Despite the recent meme-stock surge, shares remain down 12.5% over the past year. The stock has fallen roughly 81% over the last five years of trading.
Last quarter, Opendoor beat revenue expectations by 9.3% with $1.15 billion in sales. The company reported 2,946 homes sold, down 4.3% year-over-year.
The majority of analysts covering the stock have maintained their estimates over the past 30 days. This suggests they expect the business to continue on its current trajectory.
Meme Stock Momentum
The recent valuation gains appear largely disconnected from fundamental business improvements. The stock’s newfound meme status has attracted day traders and retail investors.
With a forward price-to-sales ratio of roughly 0.3, the company trades at just 30% of expected annual sales. This relatively low valuation has made shares attractive to speculative traders.
The modest P/S ratio potentially opens the door for explosive gains if results exceed expectations. Even small performance beats could trigger large price moves given the current trading environment.
Peers in the real estate services segment have delivered mixed results this quarter. CBRE reported 16.2% revenue growth and beat estimates by 4.3%, while Newmark posted 19.9% revenue growth.
Management may consider selling new shares at current elevated prices to raise capital. Such a move could strengthen the balance sheet but might also dilute existing shareholders.
Any share issuance could dampen meme-stock momentum and lead to selling pressure. The company has missed Wall Street revenue estimates twice over the past two years.
Current analyst price targets average $1.17 compared to the stock’s recent price of $2.22. The wide gap reflects uncertainty about whether recent gains can be sustained.
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