Shares of Opendoor Technologies (OPEN 3.38%) were gaining today after the home-flipping specialist posted third-quarter results last night that show the company continuing to adapt to a slower housing market.
The stock also seems to be getting a boost from macrolevel data that is convincing the market that the Fed is done raising interest rates as today's jobs report showed weak employment growth in October.
As of 12:06 p.m. ET, the stock was up 4.5% after gaining as much as 19.5% earlier in the session.
Image source: Getty Images.
How Opendoor is managing through a difficult housing market
On a sequential basis, Opendoor increased its purchase activity by 17% to 3,136, and it sold 2,687 homes in the quarter, generating $980 million, which was down 71% from a year ago. The revenue figure matched the company's guidance but missed the analyst consensus of $1.02 billion.
Gross profit also returned to positive territory at $96 million versus a loss of $425 million in the quarter a year ago but was down from a $149 million profit in Q2. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $49 million, ahead of its guidance and better than a loss of $168 million in the quarter a year ago.
On the bottom line, the company reported a generally accepted accounting principles (GAAP) loss of $106 million or $0.16 per share, which compares to $1.47 per share in the quarter a year ago and the analyst consensus at $0.15 per share.
The company has continued to focus on reducing its cost structure and improving its pricing accuracy, and the impact of those efforts seems to be visible in the bottom-line improvement.
CEO Carrie Wheeler said, "As we exit the year with an improved cost structure, strong balance sheet, and scaled customer-acquisition channels, we believe we have laid the foundation to reaccelerate revenue next year."
What's next for Opendoor?
Management said higher mortgage rates were continuing to pressure the business and reduce sales rates, weighing on Q4 expectations.
For the current quarter, it expects revenue of $800 million to $850 million, down 71% from Q4 2022 at the midpoint and below the consensus at $1.14 billion. It also sees an adjusted EBITDA loss of $95 million to $105 million.
Those numbers are unlikely to inspire investor confidence, but the company has shown some ability to control its losses, and the stock is benefiting from hopes that interest rates have peaked. It may take time for the housing market to recover, but if it continues making progress on the bottom line, the stock should be rewarded.
