Opendoor tanks after earnings as CEO thanks new investors for 'increased visibility'

Opendoor's stock experienced a dramatic decline of over 20% in after-hours trading on Tuesday, despite CEO Carrie Wheeler expressing gratitude to investors for their recent interest during the company's earnings call. "We appreciate your enthusiasm for what we're building, and we're listening intently to your feedback," Wheeler stated, acknowledging the surge in trading volumes that has seen shares rise nearly fivefold since July. Prior to this surge, Opendoor's stock had struggled significantly, hitting a low of 51 cents by late June. The situation prompted the company to consider a reverse stock split to maintain its Nasdaq listing, but they have since announced their return to compliance, canceling that proposal. Founded in 2014, Opendoor operates on a technology-driven model for buying and selling homes, aiming to capitalize on real estate market fluctuations. The company's financial performance has been under pressure, with revenue plummeting by two-thirds from $15.6 billion in 2022 to $5.2 billion last year, largely due to rising interest rates that have dampened housing demand. Hedge fund manager Eric Jackson, who recently invested in Opendoor, believes the stock could eventually reach $82, although it closed at $2.52 on Tuesday before dropping below $2 in after-hours trading. In its latest report, Opendoor showed a slight revenue increase of 4% to $1.57 billion, but the company still posted a net loss of $29 million, compared to $92 million last year. Looking ahead, Opendoor projects revenues between $800 million and $875 million for the current quarter, representing a significant decline from the previous year. They also anticipate acquiring just 1,200 homes in Q3, down from 1,757 in Q2 and 3,504 in Q3 of 2024. The finance chief, Selim Freiha, commented on the deteriorating housing market, noting that persistently high mortgage rates have suppressed buyer demand, leading to lower sales and an increase in new listings. In response, Wheeler emphasized the company's shift towards a referral-based business model, which requires less capital investment. She labeled this transition as the most critical strategic change in Opendoor's history. Despite the positive developments in visibility, investor reactions have been lukewarm, highlighting the challenges ahead for the company. "We intend to make the most of it," Wheeler concluded, signaling a determination to navigate the turbulent market.