Shares of Opendoor (OPEN) fell Friday after the online marketplace for buying and selling residential real estate said its revenue fell and its losses widened year over year in the third quarter.
Even more troubling was management’s admission that losses will increase further in the fourth quarter. OPEN issued nearly 181 million new shares, also raising dilution concerns.
Despite falling profits, Opendoor stock is trading at well over 10 times its price in early June, thanks to meme stock enthusiasts who call themselves the “Open Army.”
Behind the overall weakness, several updates in the company’s earnings release support buying the dip in OPEN stock after the earnings decline.
For example, under the leadership of its new CEO – Kaz Nejatian – the San Francisco-based company now hopes to reach profitability by the end of next year.
Nejatian is making sweeping changes, including removing external consultants and moving to an artificial intelligence (AI)-based operating model to reduce losses over the next 12 months.
Over time, his ambition to transform Opendoor into a streamlined marketplace for real estate transactions could drive the company’s stock price significantly higher.
For high-risk investors, Opendoor shares could be worth buying through 2026 as insiders have increased their exposure to the Nasdaq-listed company over the past three months.
Since August, insiders have made three purchases and no “sells.”
This indicates internal confidence in the company’s long-term prospects. Additionally, Nejatian’s entire compensation is tied to the performance of OPEN stock, suggesting he has immense confidence in his turnaround strategy.
Note that Opendoor Technologies is still trading above its 100-day moving average (MA), meaning the bulls are still in control here.
Despite the aforementioned positives, Wall Street recommends avoiding Opendoor primarily due to the state of its meme stock.
The consensus rating on OPEN stock stands at “Hold” only, with even the highest price target of $6 indicating a potential downside of around 6% from current levels.
