Opendoor’s Earnings Paint a Rosy Picture. Why OPEN Stock Could Clear $50+.

What Happened to the Opendoor Stock Price Today?

  • Opendoor (NASDAQ:OPEN) stock shot higher after the online real estate technology company reported first quarter numbers that absolutely crushed estimates, included a way-above-consensus Q2 guide, and which broadly underscored that this company is firing on all cylinders today.
    A picture of the OpenDoor (OPEN) app on a phone.

    Source: PREMIO STOCK/Shutterstock.com

  • Even after the pop, though, OPEN stock remains down 20% year-to-date, and trades about 50% off its February highs.
  • We think a run back towards those all time highs in in-store for the stock in the near future.

Why It Happened

  • Opendoor’s first quarter numbers were awesome.
  • The company expanded into six new markets in the quarter, added another six new market in April and May, and remains on track to double its number of markets to 42 by year-end.
  • Opendoor sold 2,462 homes in the quarter, up 190% quarter-over-quarter and good enough to clock in at 0.2% national share of U.S. existing home sales in Q1 — a pandemic high mark.
  • Those home buyers were very pleased with Opendoor. Throughout the quarter, the company retained an NPS score north of 80.
  • Average sales prices on homes rose 4% sequentially and 19% year-over-year, paced by the red-hot housing market and rapidly appreciating prices.
  • Revenues jumped 200% quarter-over-quarter.
  • Gross margins expanded to an impressive 13%, up 591 basis points year-over-year, thanks to more favorable unit economics with higher-priced homes and sharper pricing algorithms.
  • All of this growth came on relatively muted growth in expenses, so adjusted EBITDA margins improved a very impressive 1,059 basis points in the quarter.
  • All of these trends are expected to persist in the second quarter, for which Opendoor guided way higher on both revenues and EBITDA.
  • Everything looks great over at Opendoor today. No wonder OPEN stock is moving higher.

Does It Matter?

  • These numbers matter because they underscore that recent weakness in OPEN stock is fundamentally unsubstantiated.
  • Opendoor stock got caught up in a rotation out of growth stocks and into value stocks over the past three months. Its recent drop has absolutely nothing to do with the business. These numbers very clearly corroborate as much. The business is on fire today.
  • Opendoor will continue to report very good numbers over the duration of 2021, as the company expands from a widely-loved online real estate platform in just a few markets for lower-priced homes, to a widely-loved online real estate platform in dozens of markets for homes of all shapes, sizes, and prices.
  • That’ll be just the beginning.
  • Long-term, we maintain that Opendoor is transforming into the Amazon (NASDAQ:AMZN) of houses.
  • OPEN stock has huge upside potential from here.

OPEN Stock Price Forecast

  • Home buying and selling are moving online. That’s indisputable. The future of real estate is digital.
  • Opendoor is and will remain the king in this space for the foreseeable future, thanks to its industry-leading pricing algorithms and technology (which are are the result of fact that the engineering team is full of a bunch of former Square, Uber, and Twitter top engineers), rapid market expansion, and ability to create a marketplace more quickly with more benefits than any other platform.
  • Long-term, we think it is likely that one out of every ten homes sold in the U.S. will be sold through Opendoor.
  • On that assumption, our modeling suggests OPEN stock is worth at least $50 today.

The recent growth sector meltdown has created multiple long-term buying opportunities. OPEN stock may be the best of such buying opportunities.

But it is far from the only buying opportunity in the market. Instead, we think there are actually dozens of growth stocks out there which — from their currently depressed bases — could rally several hundred percent over the next year.

We regularly cover all our favorite top stock picks across several emerging megatrends, like the Intelligence Economy, Digitainment, Next-Gen Mobility, and more, in our free e-letter, Hypergrowth Investing.

Start getting free advice on hot stocks in your inbox each day the markets are open by subscribing to Hypergrowth Investing today.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this video.

By uncovering early investments in hypergrowth industries, Luke Lango puts you on the ground-floor of world-changing megatrends. It’s the focus of his premiere technology-focused service, Innovation Investor. To see Luke’s entire lineup of innovative next-generation mobility stocks, become a subscriber of Innovation Investor today.


Article printed from InvestorPlace Media, https://investorplace.com/hypergrowthinvesting/2021/05/opendoors-earnings-paint-a-rosy-picture-why-open-stock-could-clear-50/.

©2021 InvestorPlace Media, LLC