What happened

Shares of Opendoor Technologies (OPEN -4.67%) were having a rude awakening this morning after the home-flipping specialist gave a disappointing second-quarter earnings report.

As of 10:32 a.m. ET, the stock was down 24% as the company beat estimates in the quarter but offered weak guidance. 

So what

As the housing market has slowed substantially, Opendoor's revenue has fallen sharply as well. Revenue in the quarter was down 53% to $1.98 billion, which was still better than the consensus at $1.84 billion. Homes sold fell by nearly half to 5,383 in the quarter, while homes purchased was down by 81% to 2,680. It expects to purchase roughly 3,000 homes a quarter through the end of the year.

Higher mortgage rates have put the brakes on the housing market, and the company said that it has been operating with elevated risk spreads since last June, which has caused it to slow down its purchasing.

On the bottom line, the company continued to struggle as it rightsizes its business. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at a loss of $168 million, compared to a profit of $218 million in the quarter a year ago. Its adjusted loss of $0.30 per share was better than expectations at a loss of $0.38.

CEO Carrie Wheeler said in the earnings release: "We exceeded the high end of our guidance in the second quarter as we continue to focus on what we can control and operate with discipline in this environment. Our results reflect the progress we've made in strengthening our offering, driving cost efficiencies and managing risk."

Now what

For the third quarter, Opendoor expects a further deceleration in revenue, calling for $950 million to $1 billion, down by two-thirds from a year ago and much worse than estimates at $1.36 billion.

On the bottom line, it forecast an adjusted EBITDA loss of $60 million to $70 million, an improvement from the second quarter, but a similar loss in terms of margins.

Opendoor's business model is still unproven and peers like Zillow Group and Redfin already bowed out of the home-flipping industry once home prices started falling. Expect the stock to struggle until the business proves it can be stable and profitable.