Shares of Opendoor Technologies (OPEN 3.38%) were down for the second straight session Tuesday after the company issued disappointing fourth-quarter results after the closing bell Thursday. The stock continued to fall as investors reacted to the earnings report and to a broader sell-off in the tech sector.
Opendoor shares closed Tuesday's session down 6.8% after falling 10.4% on Friday. The Nasdaq Composite closed down 0.9% Tuesday amid weakness in AI stocks. Comments about higher prices from home improvement retail giant Home Depot also seemed to cool off hopes that interest rates would come down later this year, as inflation remains sticky.
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Opendoor still needs help
Opendoor -- the world's largest iBuyer, or instant buyer, of homes -- appears to be treading water as it waits for the housing market to loosen up and for interest rates to decline. Revenue fell sharply in the quarter, as expected, as the company scaled back its purchasing activity from 2022 levels and cut its losses.
Opendoor increased its home-buying activity sequentially each quarter of 2023, but the sluggish housing market is weighing on demand for its inventory. The company purchased roughly 60% more homes than it sold in 2023. There was little company-specific news out on Opendoor following the quarterly report, but after having more time to digest it, investors seemed to be left with the feeling that a recovery for the business would take longer than they had previously expected.
What's next for Opendoor
Management said that it does not expect Opendoor to turn an adjusted net profit in any quarter of 2024, tamping down hopes of a quick turnaround. The company has also said that it needs to bring in $10 billion in annual revenue to turn a profit, and it remains far from that level -- it brought in just $870 million in revenue in the fourth quarter, and expects revenue in the $1.05 billion to $1.1 billion range in the first quarter.
Opendoor will need help from lower interest rates and a strengthening housing market to reach profitability.
