What is Opendoor? OPEN stock price soars as housing market platform becomes the latest meme stock

Fast Company

3 days ago

Watch out, AMC. There's a new meme stock on the market.
Shares in Opendoor Technologies Inc. (Nasdaq: OPEN) have been on fire over the past week. Since Tuesday, July 15, OPEN stock has surged more than 188% as of Friday's market close. And today, OPEN's stock price is currently up an additional 27% in premarket trading. Here's why, and what you need to know about the company.
What is Opendoor Technologies Inc?
Opendoor is a real estate tech company based in San Francisco, California. It was founded in 2014. The company offers an online platform that allows homeowners to quickly sell their homes by providing details about the property. After the homeowners answer questions about their property, Opendoor will make them an offer to buy it directly.
Once Opendoor purchases a home from a user, it will then often make necessary improvements to the home and then sell it to a buyer for a profit. In other words, Opendoor is a house-flipping company. It buys houses on the cheap, fixes them up, and flips them for a profit.
Opendoor went public through a special purpose acquisition company (SPAC) in 2020, and it currently trades on the Nasdaq.
What's the story behind OPEN's stock price?
Less than a year after OPEN stock publicly debuted on the Nasdaq, its shares surged. OPEN's stock price went from around $11 per share in July 2020 to nearly $40 a share at one point in February 2021, according to data from Yahoo Finance.
But since then, the stock has cratered. By the end of 2022, CNBC notes, OPEN shares had fallen 92% to just $1.16 each. Opendoor's stock price fell due to the company's business prospects, which got pummelled by rising interest rates, increasing Opendoor's borrowing costs.
At the same time, rising interest rates led to a slowdown in the housing market, as demand for home buying slowed.
Recently, OPEN shares had fallen below $1, putting the company at risk of removal from the Nasdaq. The threat of delisting has prompted the company to consider a reverse stock split of up to 1 for 50, aiming to boost its share price and thereby maintain its listing on the Nasdaq, according to CNBC.
OPEN shares continued their steady decline until July of this year, when, on July 15, the stock price suddenly began to accelerate upwards. By Friday, July 18, the stock had surged more than 188% over the previous five-day period.
What is causing OPEN stock to surge?
The main driver behind OPEN's stock price surge over the past week seems to be down to one person, according to CNBC and Yahoo Finance. That person is hedge fund manager Eric Jackson.
Jackson runs EMJCapital, but if you look at Jackson's X profile, you'll see he describes himself as 'The Carvana hedge fund guy. All he does is try to find the next Carvana over & over again.'
He states this because he is the one who had the foresight to identify Carvana Co. (NYSE: CVNA) as a good buy when the stock price was trading in the single digits. In 2022, many investors thought Carvana was near bankruptcy, but Jackson was bullish on the stock.
While CVNA hit a low of under $4 per share in December 2022, it surged more than 1,000% in 2023. And its great run has continued. On Friday, CVNA shares closed at almost $348, up nearly 170% for the year.
Jackson was one of the few people to see the potential in Carvana when the stock was getting hammered in 2022. And now he seems to think he's found another stock with such potential in Opendoor.
On July 14, Jackson began tweeting consistently about OPEN shares, arguing that 'it could be a 100-bagger over the next few years.' In a lengthy thread, Jackson said he was bullish on OPEN because it's giving his hedge fund '$CVNA vibes.'
According to Jackson, some of the reasons for this are that next month, Opendoor is likely to report its first-ever positive EBITDA for a quarter. It has also cut costs aggressively and has few competitors left. Due to this and other reasons, Jackson argues that OPEN's stock price could rise to $82 per share within a few years.
Since Jackson's July 14 posts—and his subsequent posts about OPEN—the stock's price has surged more than 188%.
Is OPEN the new meme stock?
People are already describing OPEN as the new meme stock. A 'meme stock' is the description given to a stock that becomes popular with retail investors on social media. Word of mouth spreads on social channels about the new 'hot' stock, and soon many traders with brokerage accounts buy shares in hopes of seeing massive gains in a short amount of time.
GameStop Corp. (NYSE: GME) and AMC Entertainment Holdings, Inc. (NYSE: AMC) were historically two of the most popular meme stocks, and their prices surged during the pandemic as at-home retail investing saw a renaissance while people were under lockdowns.
Given that many retail investors on social media are singing the praises of OPEN after Jackson's tweets, it does seem fair to say OPEN is the new meme stock of the moment.
Of course, that doesn't make it a safe bet. Jackson lays out some compelling arguments for the stock's bright future. But in investing, nothing is ever guaranteed. And while Jackson, and plenty of others now, are bullish on OPEN, it's worth noting that there are voices out there arguing that the stock is not a buy.