Offerpad (OPAD 14.07%) isn't the biggest iBuyer in the market, but it is one of the "big three," and its recent results have been very promising. In this Fool Live video clip, recorded on Nov. 9, Fool.com contributor Matt Frankel, CFP®, along with analysts Matt Argersinger and Austin Smith, discuss why Offerpad could be an interesting play on the up-and-coming iBuying business.
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Austin Smith: My, kind of, dark horse came in now is Offerpad -- someone we never took a position and because they were a distant fourth in the iBuyer race. Now with Zillow (ZG 4.01%) (Z 3.90%) removed, they're very quickly by default, the third player. But if we look across the landscape, Zillow and Redfin (NASDAQ: RDFN) are mortal enemies. They're both Seattle-based, they had some name-calling about putting homes on a map and who did it first. You have to expect that Zillow is probably not going to want to supercharge Opendoor (OPEN 1.90%).
I was wondering, Matt to your point, are they the kayak of iBuyers or do they just give Offerpad the default spot? Because let's not forget that Spencer Rascoff, former CEO of Zillow, took Offerpad public through a SPAC. It feels like they've got the friendliest relationship there. Redfin and Zillow are mortal enemies at some point, maybe not anymore, I don't know. Matt, Kayak model of iBuying, or do they just give that place that inventory to Offerpad exclusively?
Matt Frankel: I could tell you, I recently bought Offerpad stock. I've added to the position a couple of times since it went public. I'm a very big fan. You can make the argument that they are the most efficient iBuying business. A very strong argument. If you look at Matt's growth trend, I think getting rid of the stock-based compensation Offerpad made about $9 million in net income. Opendoor made about $20 million, so about double, with about one-fifth of the homes. One-fifth of the volume and they made half the profit.
Their unit economics are better than all the other ones. As you mentioned, they have a deep connection to Zillow already. I could definitely see them partnering with one. If I were the heads of Offerpad, Opendoor, and Redfin, I would be scrambling to partner with Zillow now that they did this. Offerpad is my fun investment in the iBuying space that has a lot of potential, I think.
Matt Argersinger: It's the Valient comics of the industry compared to Marvel and DC and Opendoor and I guess Redfin now. I like what you guys are saying, and Rich Barton is out there saying he really wants to focus on the asset-light business model that Zillow has been sort of on prior to getting into the Zillow Offers business. I think they'd be open to that. I mean, licensing or coming up with some lead generation for these iBuyers could be pretty lucrative.