To The Moon

🌟🌟🌟Opendoor Technologies $Opendoor Technologies Inc(OPEN)$  has pulled a dramatic comeback - up 42% on Monday's trading and a whopping 208% in the past week.  Suddenly everybody is asking - Could this be the next meme king?

Enter Eric Jackson, hedge fund manager and recently Opendoor evangelist.  He said that Opendoor could be a 100 Bagger with a USD 82 share price target!

The big question is - Can Opendoor really follow Carvana $Carvana Co.(CVNA)$  path to new heights?

Opendoor versus Carvana - 2 Disruptors,  2 Very Different Markets

Opendoor and Carvana are both tech driven platforms that aim to simplify buying and selling but they operate in entirely different markets - homes vs cars. 

What OpenDoor Does 

Opendoor is a digital real estate platform that pioneered the iBuying model.  It buys homes directly from sellers,   makes light repairs and resells them.  The goal? Speed, simplicity and certainty. 

Here is how it works:

Sellers get an instant cash offer online using Opendoor's pricing algorithm. 

Opendoor buys the home, handles the repairs and lists it for resale. 

Buyers can browse homes on the app, tour them and purchase directly. 

It also offers mortgages, title and escrow services, making it a one stop shop. 

Recently Opendoor has pivoted towards agent assisted transactions to reduce risk and improve margins, a sign that pure iBuying may not be sustainable in tough markets. 

What Carvana Does 

Carvana is an online used car retailer that lets you browse thousands of vehicles online.  It gets financing, trade in your old car and schedule delivery.  All these are done digitally.  After that, you can pick up your car from a multi storey  building that resembles a vending machine. 

Unlike Opendoor, Carvana does not buy cars to flip them for profit.  It sources inventory from auctions, trades in, partners and then sells them with a mark up.  It also offers vehicle service contracts, insurance and financing, making it a full stack auto retailer. 

How is the US Real Estate Market Now? 

The market is cooling but stabilising.  Home prices are up just 1.8% year over year, its slowest growth since 2012.  Inventory is rising   with over 1 million homes on the market, a return to pre pandemic levels. 

Mortgage rates hover around 6.7%, keeping housing affordability rather tight. 

Buyer power is increasing.  There are fewer bidding wars, more price reductions and longer days on the market. 

However foreign buyers are back, spending USD 56 billion on US homes in the past year.  The Midwest and Northeast states are hot while places like Florida and Texas are seeing price declines. 

Overall the housing market is cautious and caution is not the best partner for Open Door which is built on a model of fast deals and fluid inventory. 

So Can Opendoor Be The Next Carvana? 

Maybe.  Opendoor needs to prove that it can turn profit in a choppy housing market while wearing meme goggles.  If it hits USD 82, Eric Jackson gets meme immortality.  If it does not, he may sink into oblivion. 

The Hype vs The Reality 

The Hype - Retail investors are piling on, Reddit is buzzing and Eric Jackson's "100 Bagger" call has turned Opendoor into the meme stock of the day.  Trading volume is off the charts and short interest is high.  These are classic meme stock ingredients. 

The Reality - Opendoor's fundamentals are shaky.  It posted a USD 392 million loss last year.  Revenue has dropped 26% and it is burning cash fast.  The housing market is still sluggish with home sales down.  There are more sellers than buyers.  This is a tough environment for a company built on flipping homes. 

The Pivot - Opendoor is shifting to a leaner, agent assisted model in order to reduce capital risk.  Early signs show improved margins but it is still far from profitability. 

Analyst Sentiment -  Wall Street's Analyst Average Target Price is USD 1.15, well below current levels.  Citi recently downgraded it to USD 0.80.  That is a red flag for long term investors. 

So Should You Invest? 

If you are chasing momentum and can stomach volatility, Opendoor might offer short term thrills.  However if you are looking for a solid long term play with strong fundamentals, this stock is more speculative than strategic.  

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