Opendoor leads meme stock redux on Wall Street with shares tripling in one week
The online real estate startup saw shares popping more than 22% in premarket trading Tuesday, set to extend a red-hot run powered by retail traders chasing meme stocks. It had surged more than 42% in Monday's session with trading halted multiple times due to volatility.
The stock, which had been trading mostly under $1 this year, hit a high of $4.97 during Monday's session and closed the day at $3.21 apiece. Its meteoric rally pushed the stock up by more than 500% in July alone.
The ticker $OPEN has been heavily cited on WallStreetBets, the online forum behind the infamous GameStop mania in 2021. It gained traction on the internet partly after hedge fund manager Eric Jackson, an investor in Opendoor, started touting the stock, saying it can reach $82 a share.
"HODLTHE($OPEN)DOOR," one post reads.
Trading volumes exploded with 1.9 billion of Opendoor shares exchanging hands on Monday, more than 1,700% of the three-month average, according to FactSet.
About 22% of Opendoor's available shares are sold short, meaning short-covering could be at play during this run. Short sellers tend to buy back shares to cut their losses when their short target rallies suddenly, and their buying can further push up the stock.
Heightened options trading in the name also intensified the rally. Bespoke Investment Group called Opendoor a "poster-child" for the recent wave of options market optimism.
"That stock is up 500% in three weeks; total call open interest has tripled over that time period, Bespoke said in a note to clients. "Surges in call buying are driving extreme moves higher for a small slice of the market, even as most other stocks drop."
When Opendoor went public through a special purpose acquisition company in 2020, it was riding a SPAC wave and broader gains driven by low interest rates and Covid-era market euphoria. Opendoor's business involved using technology to buy and sell homes, pocketing the gains.
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