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Sometimes, financial traders might choose to cling to an investment when they’ve lost money. It’s not a great idea to try this with Opendoor Technologies (NASDAQ:OPEN) stock, however. Opendoor will have to contend with a weak real estate market. Besides, the company’s financial figures are eye-opening and not in a good way.
Opendoor Technologies might be considered a pioneer of iBuying, which is basically an online version of home flipping. It’s an interesting concept that has surface-level appeal at a time when so many activities are done virtually.
Yet, there’s a big difference between an interesting concept and a successful business. Opendoor may have thrived when macroeconomic conditions were more favorable, but unfortunately, the company isn’t proving itself to be an all-weather business.
What’s Happening with OPEN Stock?
This has been a tough year for many stocks. However, OPEN stock has been a consistent wealth destroyer. The shares traded at $15 when the year started believe it or not; not long ago, they fell below $2.
If you’re thinking about being a hero and buying the stock, consider this. The housing market entered into bubble-like conditions last year during the Covid-19 pandemic recovery. Now that the stimulus has run out, it’s time for homeowners who bought near the top of the market to face reality.
It’s been reported that “the number of Americans actively shopping for a home has fallen by an estimated 30% over the last year.” Moreover, despite there being one-third more active listings, “homes spent 13% more days on the market versus the same time last year.”
Those facts, gathered by the Wall Street Journal, point to an ongoing and alarming trend. National home value growth peaked in April and then slowed for five months in a row. The heyday of the home-buying frenzy has apparently passed, and conditions clearly don’t favor an iBuying specialist like Opendoor Technologies.
Bottom-Line Stats Look Bad for OPEN
As Opendoor geared up to release its third-quarter 2022 earnings report, Wall Street kept its expectations low. Indeed, the analysts weren’t asking for much; a net earnings loss of 49 cents per share would have been in-line with their expectations.
The bar was low, but the result was much lower. Shockingly, Opendoor Technologies disclosed a Q3 2022 net loss of $1.47 per share. We’re talking about a $928 million quarterly loss, compared to $57 million in the year-earlier quarter.
For the current quarter, Opendoor guided for an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) loss of $335 million to $355 million. In other words, the fourth quarter won’t likely provide much relief for Opendoor Technologies or its stakeholders.
What You Can Do Now
There’s no need to assume that the real estate market is about to crash. Just understand that some data points to weakness in the housing market, and this will make it difficult for Opendoor Technologies to thrive.
So, will the terrible losses in OPEN stock persist? There’s no crystal ball to provide a definite answer, but the outlook isn’t favorable. The best course of action right now is to review Opendoor’s current and projected data. Then, just sit tight as a harsh housing market makes it awfully difficult to recommend a long position in Opendoor Technologies.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.