Is Opendoor Technologies a Good Buy Under $15?

: OPEN | Opendoor Technologies Inc. News, Ratings, and Charts

OPEN – Digital real estate platform Opendoor Technologies made its stock market debut almost a year ago through an SPAC deal. However, the stock has declined in double percentage digits since, despite the booming housing market. So, should one scoop the shares of OPEN now? Read more to learn our view.

Opendoor Technologies Inc. (OPEN) in San Francisco is a digital real estate platform. The company made its stock market debut through a reverse merger with institutional investor Chamath Palihapitiya’s Social Capital Hedosophia Holdings II on December 21, 2020. Palihapitiya labeled this merger as his next “10x idea,” indicating the initial investment is expected to generate 10x returns.

The merged company was valued at $4.8 billion. Regarding this, OPEN Founder Eric Wu said, “This is one of many milestones towards our mission and will help us accelerate the path towards building the digital one-stop-shop to move.” It was ranked #35 on CNBC’s 2020 Disruptor 50 list.

However, shares of OPEN have declined 52.5% in price since its listing to close yesterday’s trading session at $13.30. The stock has slumped 38.2% over the past month and 11.2% over the past five days.

Here is what could shape OPEN’s performance in the near term:

Substantial Debt Burden

OPEN raised $850 million through an upsized senior notes offering in August. It used approximately $103.30 million of the proceeds to enter privately negotiated capped call transactions with option counterparties. The remaining funds raised were used to finance the company’s general corporate expenses.

OPEN’s trailing-12-month total debt stands at $6.44 billion. However, the company’s trailing-12-month net operating cash flow and levered free cash flow are negative $6.26 billion and $6.34 billion, respectively, raising concerns regarding the company’s debt and interest repayment. Its debt/free cash flow ratio is negative 0.37.

Dilution of Shareholder’s Equity

In July, OPEN redeemed 13,799,947 of outstanding warrants. The company raised $22.40 million in total cash proceeds. However, due to this warrant redemption, the number of publicly-traded OPEN shares increased substantially, indicating lower a ROE.

And in February, OPEN announced a follow-on public offering of 28.54 million shares, priced at $27 per share. The company raised $770 million in gross proceeds from this secondary public offering. However, due to such large equity financing, OPEN’s ROE and EPS have declined substantially.

Unfavorable POWR Ratings

OPEN has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

OPEN has an F grade for Quality and a D for Value. The company’s negative 12.56% net income margin and negative 36.82% ROE justify the Quality grade. In addition, OPEN’s negative forward non-GAAP Price/Earnings multiple is in sync with the Value grade.

Of the 43 stocks in the D-rated Real Estate Services industry, OPEN is ranked #39.

In addition to the grades I have highlighted, view OPEN’s ratings for Stability, Sentiment, Momentum, and Growth here.

Bottom Line

The housing market is still piping hot, with home prices nearing all-time highs. According to a Redfin report, median home sale price rose 14% year-over-year to $359,750 during the four-week period ended December 12. Despite the industry tailwinds, OPEN is yet to break even. In fact, analysts expect the company’s EPS to remain negative until at least next year. Thus, the stock is best avoided now.

How Does Opendoor Technologies Inc. (OPEN) Stack Up Against its Peers?

While OPEN has a D rating in our proprietary rating system, one might want to consider looking at its industry peers, Newmark Group, Inc. (NMRK), Jones Lang LaSalle Incorporated (JLL), and The RMR Group Inc. (RMR), which have a B (Buy) rating.

Note that NMRK is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.

Want More Great Investing Ideas?

3 Stocks to DOUBLE This Year


OPEN shares were trading at $14.10 per share on Friday afternoon, up $0.80 (+6.02%). Year-to-date, OPEN has declined -37.97%, versus a 25.12% rise in the benchmark S&P 500 index during the same period.


About the Author: Aditi Ganguly


Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
OPENGet RatingGet RatingGet Rating
NMRKGet RatingGet RatingGet Rating
JLLGet RatingGet RatingGet Rating
RMRGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Investors: Are You Ready for November?

The S&P 500 (SPY) tumbled to end October. Is that a harbinger of more downside to come? Or will the bull market return with gusto? Investment pro Steve Reitmeister shares his time market views including a preview of his favorite stocks. Get the full story below...

3 Cybersecurity Stocks Defending Against Digital Threats

The demand for cybersecurity solutions is rising as digital threats and sophisticated cyberattacks continue to escalate. Therefore, it might be wise to keep track of cybersecurity stocks, CrowdStrike (CRWD), Palo Alto Networks (PANW), and Fortinet (FTNT), as they offer innovative solutions presenting further growth opportunities. Continue reading...

3 Oil Stocks With High Upside as Global Demand Rebounds

The outlook for oil demand growth appears promising despite economic uncertainties and worldwide supply deficit. Amid this, investing in quality oil stocks Enterprise Products Partners (EPD), Marathon Oil (MRO), and Plains All American Pipeline (PAA) could be ideal as global demand rebounds. Read more...

3 Tech Stocks Under $10 That Could Deliver Big Gains

The technology industry is booming, driven by breakthroughs and significant government investments. Thus, incorporating affordable tech stocks, Sprinklr (CXM), Sabre Corporation (SABR), and Cricut (CRCT) into your portfolio provides an accessible entry point to capitalize on the industry’s growth. Read more…

2 Concerns for Investors in October

The S&P 500 (SPY) may be touching all time highs...but recent action points to concerns on 2 fronts: inflation and earnings. Investment veteran Steve Reitmeister shares his views on these 2 timely topics along with a preview of his top stocks to buy now.

Read More Stories

More Opendoor Technologies Inc. (OPEN) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All OPEN News