Opendoor Technologies ($OPEN) Pre-earnings Analysis
this was already a good buy before markets turned it into a meme stock, but unfortunately the fate of meme stocks is usually poor. One retail traders get too excited about a company, Wall Street has a way of keeping it down for a long time to discourage retail investors from holding / buying. Looking back at Opendoor's performance, they proved they can do really well in low interest rate environments. At the end of the day, this is a real estate stock that will benefit from flipping houses, but high rates slim down profit margins and sales. We saw that play out in real time when revenue declined from $15.57 billion in 2022 to $5.15 billion last year. Q1 revenue already declined another 2.37% this year, and earnings today will likely reflect another flat / low growth quarter.
At $1.88 billion in market cap, there's definitely good reason to why $OPEN caught investors attention. This is arguably an undervalued business that will make a comeback when monetary policy is back in their favor, but it is now considered a "meme stock," making its movement highly volatile. There are better real estate companies to park capital in that are far more attractive...for example, many homebuilder stock right now is still trading at low valuations...names like $LEN and $DHR. All these names will likely begin to gain when interest rates come down.
Since it's a meme stock, it may help to focus more on the technicals than the fundamentals. $OPEN's chart suggests 1.75 as key support, so if in it or want to get in, use that as a stop loss point. Resistance to break is 2.92 for a possible bounce back to 3.80-4.00.