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OPEN inventory slump likely to continue

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Sometimes financial traders may choose to hold on to an investment when they have lost money. It’s not a good idea to try with Open door technologies (NASDAQ:OPEN) stock, however. Opendoor will face a weak real estate market. Also, the company’s financial numbers are telling and not in a good way.

Opendoor Technologies could be considered a pioneer of iBuying, which is basically an online version of home flipping. It’s an interesting concept that has superficial appeal in a time when so much activity is done virtually.

Yet there is a big difference between an interesting concept and a successful business. Opendoor may have thrived when macroeconomic conditions were more favorable, but unfortunately the company is not proving to be an all-weather business.

OPEN Open door technologies $1.71

What’s going on with OPEN Stock?

This year has been difficult for many stocks. However, the stock OPEN has been a consistent wealth destroyer. Stocks were trading at $15 at the start of the year, believe it or not; not so long ago they fell below $2.

If you plan on being a hero and buying stocks, consider this. The housing market entered bubble-like conditions last year as it recovered from the Covid-19 pandemic. Now that the stimulus has worn off, it’s time for owners who bought near the top of the market to face reality.

It has been reported that “the number of Americans actively buying homes has dropped about 30% over the past year.” Additionally, despite having a third more active listings, “homes spent 13% more days on the market compared to the same period last year.”

These facts, collected by the the wall street journal, indicate a continuous and alarming trend. National home value growth peaked in April, then slowed for five consecutive months. The height of the home buying frenzy has apparently passed, and conditions clearly do not favor an iBuying specialist like Opendoor Technologies.

Result stats look bad for OPEN

As Opendoor prepared to release its third quarter 2022 earnings report, Wall Street kept expectations low. Indeed, the analysts were not asking for much; a net profit loss of 49 cents per share would have been in line with their expectations.

The bar was low, but the result was much lower. Surprisingly, Opendoor Technologies reported a net loss of $1.47 per share in the third quarter of 2022. We are talking about a quarterly loss of $928 million, compared to $57 million in the previous quarter.

For the current quarter, Opendoor reported an adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) loss of $335 million to $355 million. In other words, the fourth quarter is unlikely to bring much relief to Opendoor Technologies or its stakeholders.

What you can do now

There is no need to assume that the real estate market is about to crash. Just understand that some data points to weakness in the housing market, which will make it difficult for Opendoor Technologies to thrive.

So, will the terrible OPEN stock losses persist? There is no crystal ball to provide a definitive answer, but the outlook is not favorable. The best course of action right now is to review Opendoor’s current and projected data. Next, sit tight, because a tough real estate market makes it extremely difficult to recommend a long position in Opendoor Technologies.

As of the date of publication, neither Louis Navellier nor the member of the InvestorPlace research staff principally responsible for this article holds (directly or indirectly) any position in the securities mentioned in this article.


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