All eyes are on Opendoor (NASDAQ:OPEN) stock as the company gets ready to report second-quarter earnings after the market closes today. Unfortunately, shares have fallen 8% in the past month due to a hefty $62 million fine from the Federal Trade Commission (FTC).
On Monday, the FTC accused Opendoor of “cheating potential home sellers by tricking them into thinking that they could make more money selling their home to Opendoor than on the open market.” The FTC also alleges that Opendoor pitched potential sellers by using deceptive and misleading tactics. The commission says most people who sold their homes on Opendoor received “thousands of dollars less” than if they had used the traditional process. As a result, Opendoor will have to pay $62 million and “stop its deceptive tactics.”
FTC Bureau of Consumer Protection Director Samuel Levine added:
“Opendoor promised to revolutionize the real estate market but built its business using old-fashioned deception about how much consumers could earn from selling their homes on the platform.”
The FTC fine certainly does not create a positive backdrop leading into earnings. Let’s get into the details.
OPEN Stock: 3 Metrics to Watch for Earnings
First, OPEN stock shareholders will want to watch out for revenue in the upcoming report. The consensus analyst estimate for Q2 revenue is $4.19 billion. That figure implies year-over-year (YOY) growth of 286%. For the period, the low and high revenue estimates are $3.93 billion and $4.44 billion.
Next up is earnings per share (EPS). Analyst estimates call for an average EPS of 12 cents, with low and high estimates at 3 and 17 cents. A year ago, Opendoor reported an EPS loss of 24 cents. Any trend from negative EPS to positive is a great signal, showing the company is becoming more profitable.
Finally, shareholders will want to keep an eye out for guidance. Analysts expect an EPS loss of 7 cents and revenue of $4.26 billion for Q3. For the full year, EPS is also expected to be 14 cents while revenue is expected to be $17.96 billion.
Currently, OPEN stock carries an average price target of $12 among 13 firms with coverage of shares. JPMorgan analyst Dae Lee gave the most recent update on coverage. On July 28, the firm initiated coverage of OPEN with an “overweight” rating and a price target of $9 per share.
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On the date of publication, Eddie Pan did not hold (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.
