The future is digital and whether it is buying goods and services online or selling your home online, everything can be done right from your couch.
Nobody is willing to spend hours and weeks trying to look for sellers for their home and this is where iBuying makes a mark. Opendoor Technologies (NASDAQ:OPEN) offers a solution that is suitable to meet the needs of the customers today. The company is doing what Zillow (NASDAQ:Z) couldn’t.
Opendoor has nailed the iBuying model and is making the right moves in the industry. OPEN stock may not be at its best today, but it has solid potential to grow. The share price hit an all-time high of $39 in February and is now trading much lower, at below $16 today.
I believe the real estate business is one of the best ways to make money and investing in OPEN stock has massive potential to grow. Let’s dig deeper into my investment thesis for the OPEN stock.
Business Model That Brings Ease And Convenience
The number one digital platform for real estate, Opendoor is operating in a $1.6 trillion industry. The company buys and sells homes in no time and is constantly growing inventory. A true disruptor in the industry, Opendoor has made it easier for homeowners to sell their property without compromising. There is a lot of optimism about the housing market and we will see the transition in the coming year. According to Business Insider, the market will be back to normal in 2023 but the prices will be higher.
In the third quarter, the company reported revenue of $2.2 billion which is more than six times higher than a year ago. It also has bullish guidance for the fourth quarter and if the company meets the expectations, it will prove its potential to generate revenue and grow. The early months of the pandemic had a huge impact on Opendoor and the company had to cease buying homes for a short period. It affected the bottom line but the company has benefited from the resumption of buying and selling homes and the appreciation in home prices has worked to its benefit.
The company has made solid progress this year and its Q4 guidance is proof. It expects revenue close to $3.2 billion. What sets the company apart is not only the iBuying model but it offers speed and peace of mind to the homeowners. You not only sell your home within three days but you enjoy a stress-free process and this is what is attracting homeowners to the platform.
It has a cash balance of $1.8 billion and a debt of $2.3 billion. Since it is not an asset-light business model, the revenue margin will have to grow to meet the capital expenses. The company is allocating funds in growing inventory balance and expanding its presence. Two years from now, Opendoor could report a solid balance sheet with consistent revenue growth.
Bottom Line On OPEN Stock
Opendoor is a disruptive company with a futuristic business model. It is profitable and at the current level, it is cheaply valued. If the company continues to report the same level of revenue and growth in 2022, OPEN stock will soar. Analysts expect it to record revenue growth higher than 60% into next year.
If you look at the real estate industry, Opendoor does not have a lot of competition and customers love it for the ease and convenience it offers. The company is attracting attention for the positive word of mouth and this will benefit it in the long run.
If the market is back to normal next year, there is no looking back for Opendoor Technologies. It could become one of the biggest companies in the next few years and the dip in the stock is a good chance to enter.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long-term gains. Her knowledge of words and numbers helps her write clear stock analysis.