Opendoor Is Back in the Spotlight, But Not for Selling Homes

In a market where inventory is tight and buyers are cautious, one housing-related stock is defying gravity. And, more to the point, logic.

Shares of Opendoor Technologies (Nasdaq: OPEN) went up by over 400% in just one week, driven not by earnings or business fundamentals, but by retail investor hype on Reddit and social media.

For real estate professionals, this raises a few important questions. What’s behind the sudden surge? Does it say anything about consumer confidence in iBuying? And can Opendoor hold onto these gains?

Let’s take a closer look.

A Stock Story with Meme Potential

While Opendoor’s business model has seen its share of praise and criticism, the current surge in stock price has little to do with real estate performance.

Here’s what’s happened over the past month:

• Opendoor stock was trading at $0.51 in late June.
• On July 15, the company launched its new Key Agent app, meant to support its agent partnership program.
• That same day, the stock began climbing.
• From Tuesday, July 15 to Friday, July 18, the stock was up 188%, with another 27% gain in premarket trading that brought it to $2.86.
• As of Monday morning (July 21), shares had reached $3.31, up 429% in just one week.
• Monday afternoon, shares went over $4.80 before dropping under $4.00 again

Much of this activity appears tied to a post on Reddit’s Wall Street Bets forum titled, “OPENDOOR — this isn’t just a pump,” which received over 1,600 upvotes and 760 comments. Some users joked about gambling with rent money. One claimed to have dropped $150,000 on the stock.

Their target? $30 per share.

Enter the Hedge Fund Hype Machine

The Reddit crowd isn’t alone. According to Fast Company, hedge fund manager Eric Jackson, founder of EMJ Capital, may have poured gas on the fire.

Jackson, who gained attention for calling the rise of Carvana (CVNA) when it was trading below $4 per share, started tweeting about Opendoor on July 14. He called it the next Carvana, suggested it could be a “100-bagger,” and estimated the stock could hit $82 over the next few years.

Why the optimism? Jackson pointed to a few things:

• Opendoor is expected to report its first-ever positive EBITDA next quarter.
• The company has aggressively cut costs.
• It has fewer direct competitors in the iBuying space than before.

That was enough to get retail traders and momentum investors on board, at least for now.

But the Fundamentals Haven’t Changed Much

While the app launch and partnership program rollout are notable, analysts don’t believe these moves justify the stock’s parabolic rise.

• Opendoor has faced potential delisting from the Nasdaq due to its low share price.
• The company experienced a 92% drop from its early 2021 peak of nearly $40 per share to $1.16 by the end of 2022.
• It has weathered multiple layoffs, scaled back its home purchases, and is trying to stay afloat with new business lines.
• A reverse stock split of up to 1-for-50 is reportedly being considered to help it stay listed.

Meanwhile, financial services firm Keefe, Bruyette and Woods (KBW) issued a note cautioning investors. From their report: 

“We believe [the stock price jump] is a retail-driven squeeze as the stock has become popular on social threads like Reddit and X. We remain cautious on the shares at current levels as OPEN’s ability to scale profitability remains uncertain, particularly as the company maintains a conservative posture facing an uncertain housing backdrop.”

Aside from Opendoor’s recent and more agent-friendly initiatives, there hasn’t been much reason to report on the company. The last time was when it partnered up with eXp back in October of 2023. 

Before that, in April of the same year, the company was laying off 22% of its workforce (560 positions), citing 2022’s historic rise in mortgage rates and the resulting drop in new listings as the reason. 

As for whether the company’s fundamentals will catch up with its stock price, that remains to be seen. But for now, Opendoor is back in the headlines, and for reasons that have more to do with Reddit than real estate.