The stock market continued its September slump on Thursday with all three major indexes firmly in the red as of 11 a.m. EDT. But real estate disruptor Offerpad (NYSE:OPAD) is refusing to participate in any market weakness. Shares are up by 37% today alone and have now gained more than 64% in the last five trading sessions.
There are a couple of potential explanations for today's move. First and foremost, Offerpad revealed a new credit line led by JPMorgan Chase (NYSE:JPM) in a Securities and Exchange Commission filing Wednesday evening. The new credit facility consists of a $300 million base line and a $100 million accordion feature, and a smaller mezzanine facility as well. Offerpad's business of buying and flipping houses is very capital intensive, so even though the company received $284 million in cash as part of its recent IPO via a special purpose acquisition company, this new capital access is welcome news.
Second, it's not insignificant that Offerpad is getting quite a bit of social media attention as a potential short-squeeze candidate. It's not a secret that Reddit traders can certainly move a stock, so that could have at least something to do with the sharp upside move we're seeing.
Meme stock rallies aside, the iBuying business is gaining quite a bit of traction. A report by Zillow (NASDAQ:Z)(NASDAQ:ZG) recently indicated that 15,000 homes were bought by iBuyers like Offerpad in the second quarter, an all-time high and a 1% share of the U.S. housing market.
To be sure, Offerpad has a long way to go from here. The business is in all-out growth mode, and although it was profitable in the second quarter, the company acknowledges that it will likely operate at a loss for the foreseeable future. With iBuying still in the early innings and Offerpad having a sub-$4 billion market cap despite being one of the industry leaders, this stock could still be worth a look for patient long-term investors.