Shares of innovative real estate platform Opendoor (NASDAQ:OPEN) — which leverages a technology-driven appraisal method to make quick offers on homes — slipped on Wednesday. Earlier in the morning, news came out that CEO Carrie Wheeler sold a significant amount of her holdings. While it’s difficult to make a judgment call on insider selling transactions, context is key for OPEN stock.
According to a Seeking Alpha report, Wheeler sold 613,286 shares for $1.98 million. Further, the investment resource notes that in the past three months, nine insider trades materialized regarding OPEN stock. In total, insiders sold 1.78 million shares of Opendoor. Further, Seeking Alpha states in the past 12 months, 71 insider trades occurred.
Breaking down the aforementioned transactions, insiders purchased $17.73 million worth of shares while others sold $19.91 million worth. Notably, the lean toward insider selling might indicate possible rising pessimism.
While not disputing the data, other sources paint a much starker picture. For example, Fintel notes that, in total, insiders initiated 110 sales of OPEN stock. On the flip side, only five insider buys have occurred. What’s more, investment data aggregator Gurufocus also corroborates only five insider purchases.
The Context for OPEN Stock Doesn’t Provide Much Confidence
On the surface, insider buys generally lead to one conclusion: the initiating parties believe that the underlying security will move higher. However, the opposite action presents myriad explanations, some as mundane as covering tax obligations due to exercising stock options. Still, the broader context for the OPEN stock transactions doesn’t seem to provide much confidence.
Again, looking at the data provided by Fintel and Gurufocus, the preponderance of insider sells dominates insider buys. Also, both resources point to the same person making the insider buys, Opendoor Director Pueo Keffer. Almost invariably, investors may question why one insider purchased OPEN stock. Worth noting all five buys occurred in 2021, during the housing boom.
Also, timing may be at play here. Since the start of the year, OPEN stock gained just over 183% of its equity value. However, shares have conspicuously peaked since Aug. 1, when it closed at $5.27 per share. At the time of writing, OPEN trades hands at $3.11, reflecting a 41% loss.
As well, the longer-term performance doesn’t lend itself to sustained confidence. In the trailing one-year period, OPEN stock gave up roughly 13%. Since its public market debut, OPEN has fallen almost 72%. Thus, the insiders may be recognizing the reality of the matter.
Why It Matters
Affirming the lack-of-confidence theme, analysts provided a not-so-encouraging consensus view of hold. Within the past three months, TipRanks reports that this assessment breaks down as three buys, three holds and four sells. Still, the average price target lands at $3.98, implying about 28% upside potential.
On the date of publication, Josh Enomoto 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.
