Opendoor stock records 180% weekly gain as retail frenzy cements meme status
Following a bull thesis for an Opendoor turnaround posted to X on July 14 by EMJ Capital principal and Carvana (CVNA) spotter Eric Jackson, the stock has firmly entered retail meme stock status. Retail trading activity in Opendoor stock has increased 140% over the past 10 days compared to the preceding month, according to retail investor data provider VandaTrack.
After reaching a high of $39.24 in February 2021, shares of Opendoor had fallen to under $1 each. The latest retail rally, fueled by Jackson's thesis and speculative posts on the meme-stock Reddit forum r/WallStreetBets, has begun to push the company toward the $5 line that would lift it out of penny stock status.
On Friday, the stock closed at $2.25 per share.
The question for Opendoor leadership will be what it can do to maintain the momentum and potentially reach Jackson's price target of $82 per share. Opendoor uses iBuyer real estate technology to buy homes from owners for cash, make light repairs, then flip them back onto the open market to hopefully resell at a profit.
Jackson told Yahoo Finance that while he isn't currently making an overt activist play on the company, he has heard several ideas that, "if you waved a magic wand and suddenly [the ideas] were announced this afternoon, [I] think would cause an eruption upwards in the shares."
Read more about Opendoor's stock moves and today's market action.
Several factors contributed to Opendoor's stock price falling below a dollar.
The combination of a declining housing market and rising interest rates put pressure on the company's bottom line at the macro level, and its heavy use of borrowing to acquire and quickly flip homes has saddled the company with debt. As Jackson noted in his X thread, Opendoor has never notched a quarter of positive EBITDA.
After spending more than 30 days trading below $1, Opendoor disclosed to investors in May that it had received warning of a possible delisting from the Nasdaq. And in June, the company agreed to pay $39 million to settle a class-action lawsuit brought in 2022 by investors who claimed the company failed to disclose that its pricing algorithms are not equipped to adapt to shifting conditions in the housing market.
But investors see a tailwind. Jackson noted in his X thread that he expects Opendoor to report its first quarter of positive EBITDA in August and complimented the company's new experimentation with partnering with real estate brokers instead of constantly competing with them.
With housing market giants Zillow (Z) and Redfin having exited the iBuyer game as of 2021 and 2022, respectively, the company faces little competition.
For now, retail investors are piling into a bet that Opendoor could be the next Carvana.
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