iBuying company Opendoor Technologies (OPEN) is scheduled to report its third quarter results today, November 6, after the market close. This time, the earnings presentation will be streamed live on the Robinhood app and will include open Q&A sessions for shareholders. This is likely an effort to reach a wider audience, especially for a company that has seen significant hype.
The company faces an uncertain context. Home buying has come under pressure due to high interest rates. Despite the rate cuts, experts remain skeptical about whether housing affordability will improve enough to attract a significant number of buyers. Additionally, Fed Chairman Jerome Powell indicated that further rate cuts were not guaranteed.
In the midst of this, we take a closer look at Opendoor.
Opendoor Technologies, headquartered in San Francisco, California, operates a technology platform that transforms the way residential real estate transactions occur. The company allows homeowners to sell their properties quickly by making instant cash offers and buying homes outright. Sellers benefit from a simple process that eliminates the need for showings or open houses.
After acquiring the properties, Opendoor makes the necessary repairs and then resells the homes. Its operations are supported by proprietary algorithms that analyze market data to competitively price homes. In addition to buying and selling homes, Opendoor offers services such as home appraisals, financing and title services, creating a seamless, integrated experience for buyers and sellers across multiple U.S. markets. The company has a market capitalization of $5.32 billion.
The company’s shares soared as retail investors piled into it as a bargain. As with all meme names, there is some question as to whether the rise is based on true fundamentals. Over the past 52 weeks, OPEN stock has gained 292%, while it is up 899% over the past six months. It last hit a 52-week high of $10.87 in September, but it’s down 36% from that level.
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Opendoor’s stock is trading at a cheap valuation despite the unprecedented rise in its stock price. Its price-to-sales ratio of 1.02 is lower than the industry average of 4.36.
On August 5, Opendoor reported its second-quarter results for fiscal 2025, which indicate that the company’s finances are improving. The company said it is working to expand its agent-led distribution platform, enabling its partners to offer customers multiple solutions tailored to each owner’s needs. This would allow Opendoor to serve more sellers while generating capital-light revenue streams.
In the second quarter, Opendoor’s revenue increased 3.7% year-over-year (YoY) to $1.57 billion. Its ending inventory level fell from $2.23 billion in the second quarter of 2024 to $1.53 billion in the second quarter of 2025. Its net loss also narrowed, from $92 million in the year-ago period to $29 million.
While its contribution margin decreased from 6.3% to 4.4% during the same period, its adjusted EBITDA increased significantly, from a loss of $5 million to a revenue of $23 million. This is the first quarter since 2022 the company has reported positive adjusted EBITDA.
However, the company also issued moderate guidance compared to its ascendant second-quarter results. For the third quarter, Opendoor expects its revenue to be between $800 million and $875 million, while its adjusted EBITDA is expected to be a loss of $28 million to $21 million.
On the contrary, Wall Street analysts have confidence in the company to cut its losses. For the third quarter, analysts expect Opendoor’s loss per share to narrow 30.8% year-over-year to $0.09. For the current year, losses are expected to decrease by 39.6% annually to $0.32 per diluted share.
Wall Street analysts have become more cautious about Opendoor’s prospects. In August, Keefe Bruyette analyst Ryan Tomasello downgraded OPEN stock from “Market Perform” to “Underperform,” setting a price target of $1, citing expectations of a deeper loss in the second half of this year. The company also predicts uncertainty stemming from Opendoor’s strategic pivot.
Analysts at Zelman & Associates also assigned a $1 price target to Opendoor’s stock while downgrading it to “Sell,” likely due to the company’s moderate guidance and uncertainty surrounding its outlook.
In contrast, UBS analysts maintained a “Neutral” rating on OPEN stock while raising the price target from $1.30 to $1.60. Although UBS analysts do not expect robust growth from Opendoor, the outlook is mainly due to depreciating real estate prices.
Wall Street analysts are currently recommending Caution, with an overall consensus rating of “Hold.” Of the 12 analysts rating the OPEN stock, one analyst has rated it a “Strong Buy”, six analysts are playing it safe with a “Hold” rating, two analysts have given a “Moderate Sell” rating and three analysts have suggested a “Strong Sell”. The consensus price target of $1.62 represents a 77% downside from current levels. The high price target of $6 indicates a 12% downside.
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As of the date of publication, Anushka Dutta had (directly or indirectly) no position in any of the securities mentioned in this article. All information and data contained in this article are for informational purposes only. This article was originally published on Barchart.com
