Arizona-based Opendoor Technologies (OPEN) operates a digital platform that allows people to buy and sell homes online. I am bullish on the stock.
Long gone are the days when everything involving real estate had to be done in person. The onset of COVID-19 ensured that many transactions in the housing market would be done online, now and in the future.
That’s bad news for old-fashioned real estate companies that are slow to adapt to changes in the modern digital age. They might prefer to maintain the status quo, but younger home buyers and sellers are technology-savvy.
While this might be a problem for out-of touch real estate businesses, it’s a ripe opportunity for Opendoor Technologies to step in and take up the mantle of tech-enhanced real estate. The company is ambitiously striving to offer beginning-to-end services for both buyers and sellers of homes in the 2020s.
Should today’s investors take Opendoor seriously, though? The door is open for you to step in and see what’s inside this unique company that’s poised to transform real estate as we know it.
A Fast-Growing Business
Suffice it to say that Opendoor has come a very long way since the company’s introduction as a digital platform for residential real estate in 2014. While the company is headquartered in San Francisco, Opendoor’s reach spans far beyond California nowadays.
Opendoor came along at just the right time. Even before COVID-19 prompted many shoppers to go online for just about everything, e-commerce was in full effect, and it was only a matter of time before one or more businesses would grab share of the emerging online real estate market.
It was a timely entry for Opendoor when the company conducted its first market launch in Phoenix in 2014. By the end of 2021, Opendoor expanded across the U.S. and operated in 44 markets.
If you really need convincing of Opendoor’s regional expansion, feel free to visit the company’s listing of metro areas in which its platform is currently available.
In many familiar U.S. cities, users can sell a home directly to Opendoor, buy a home, work with a partner agent, and/or get home financing through the Opendoor Home Loans service.
Just recently, the company’s platform added to very important real estate markets. The first is California’s Bay Area. We’re talking about a pricey area where big-ticket homes are being sold.
Not long ago, Opendoor added availability in two significant markets for real estate: New Jersey and New York. As a result, “residents in more than fifteen counties and more than 450+ ZIP Codes across New Jersey and New York will have a digital way to sell their home using Opendoor,” the company proudly announced.
Stock Down, Revenue Up
For contrarian investors, few things should be as exciting as when a company is thriving while the investing community doesn’t see the value yet. This represents a divergence between price and value that can provide wealth for opportunistic traders.
This appears to be happening with OPEN stock now, as the share price is severely depressed. It’s shocking to consider that such a high-conviction company could be trading below its IPO price, but that’s exactly what’s happening.
From a 52-week high of $25.32, OPEN stock has crashed down to $7 or $8, if you can believe it. Perhaps this was brought on by the recent drawdown in technology stocks.
That’s the most plausible explanation, since the real estate market hasn’t crashed and Opendoor Technologies is going well as a business.
In 2021’s fourth quarter. Opendoor Technologies generated $8 billion in revenue, signifying a whopping 211% year-over-year increase.
That same quarter, the company posted $730 million in gross profit, up 232% year-over-year, as well as Opendoor Technologies’ first year of positive adjusted EBITDA of $58 million.
Wall Street’s Take
According to TipRanks’ consensus rating, OPEN is a Moderate Buy, based on four Buys, two Holds, and one Sell. The average Opendoor Technologies price target is $16.50, implying 105.5% upside potential.
Takeaway
Even while OPEN stock is getting pounded, the company is expanding its market footprint to new and lucrative regional real estate markets. This pace of growth is reflected in Opendoor Technologies’ rapidly expanding revenue.
Somehow, investors just haven’t warmed up to OPEN stock. At the same time, analysts on Wall Street are preparing for significantly higher price points. They’re envisioning the possibility of the stock doubling in price, and then some.
Homes are selling in markets such as California’s Bay Area and New York at high prices nowadays. Going forward, this robust multi-regional real estate market should significantly benefit Opendoor.
Best of all, it could potentially make the company’s loyal shareholders wealthy in the long run.
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