Shares of Opendoor Technologies (OPEN -1.03%) were surging today after the home flipper reported solid first-quarter results and guided toward an improving earnings before, interest, taxes, depreciation, and amortization (EBITDA) loss in the second quarter.
As of 1:53 p.m. ET, the stock was up 11.6%.
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Investors roll out the welcome mat for Opendoor
Opendoor has struggled with the challenging real estate market, and the stock is down sharply from its initial public offering (IPO) price in 2021, but last night's update seemed to give enough of a hint of a recovery.
Revenue fell 62% in the quarter to $1.19 billion as the company has scaled back on homebuying in line with the soft real estate market. That figure beat estimates at $1.09 billion, but revenue is mostly irrelevant for a company like Opendoor -- it's a reflection of activity more than profitable business as it can easily lose money on that revenue.
Gross profit was down from $170 million to $114 million, though the company has started ramping up home purchases again, which reached 3,458 homes, up 98% from the quarter a year ago.
On the bottom line, the company reported an adjusted EBITDA loss of $50 million, which was a significant improvement from $341 million in the quarter a year ago and a loss of $69 million in the fourth quarter.
CEO Carrie Wheeler said the recent settlement in the National Association of Realtors lawsuit bodes well for the company's disruptive business model and alternative approach to home sales. She also said, "Our first quarter results exceeded the high end of our guidance across revenue, contribution margin, and adjusted EBITDA."
What's next for Opendoor
Looking ahead to the second quarter, the company called for $1.4 billion to $1.5 billion in revenue, a contribution profit of $75 million to $85 million, and an adjusted EBITDA loss of $25 million to $35 million.
That shows the company is making progress toward break-even adjusted EBITDA, which would be a significant milestone. Still, there's a lot of risk for Opendoor as it tries to find success with an unproven business model that is also used by competitors Zillow and Redfin.
