Opendoor Technologies (NASDAQ: OPEN) started its publicly traded life on a high note. Shares of the cloud-based residential real estate trader more than tripled in its first eight months on the market.
But the joy didn’t last long. Opendoor’s stock is down 94.6% from the peak in February 2021.
The stock isn’t an obvious slam dunk today, but I do see signs of better days ahead. Opendoor deserves your consideration if you’re interested in a robust turnaround effort. A small, speculatory investment today could yield impressive returns in the long run.
The story so far
Opendoor has been around since 2014, starting with local home reseller services in Phoenix and Dallas. The company wants to disrupt the massive homebuying market by offering a simple alternative — skip the traditional process of listing, fixing, and showing your home and just sell it to Opendoor in a few clicks instead. The company pays cash up front, takes care of the cleanup and necessary fixes, then finds a new owner.
After six years of accelerating expansion, the company decided to go nationwide and join the stock market in December 2020. Investors embraced the seller-friendly platform at first, despite the economic pressures of the COVID-19 pandemic. But the soaring real estate market stalled in 2021, collapsed in 2022, and settled at a historically low level of existing home sales since then.
The timing of that downtrend hit Opendoor like a freight train. Trailing revenue peaked at $16.5 billion in the fall of 2022. After seven straight quarters of declining sales, that metric has retreated to $4.5 billion.
A snapshot of Opendoor’s recovery
The housing market is still tough, but Opendoor is starting to turn its financial worries around.
Sales are still slowing down, but the year-over-year drops are shrinking in the last two reports. Earnings before interest, taxes, depreciation, and amortization (EBITDA) are hovering just below the break-even line. If Opendoor can follow through on the top-line trend, sales should start rising again and positive profits would follow.
The number of home sales may be…
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