Shares of Opendoor Technologies (OPEN 2.89%) were heading lower today after the home-flipping specialist missed bottom-line estimates in its fourth-quarter earnings report. Its first-quarter guidance also called for a slow start to the year.
As a result, the stock was down 6.9% at 10:40 a.m. ET.
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Opendoor is still drowning in red ink
Like much of the real estate sector, Opendoor has struggled with the slowdown in the housing market. It's taken steps to streamline its business, but it's still significantly unprofitable.
In the fourth quarter, revenue increased 25% to $1.08 billion, which beat the consensus at $982.3 million. However, Opendoor has a business model with which revenue can easily be created without contributing to the bottom line.
It did narrow bottom-line losses, its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss going from $69 million to $49 million, but that didn't seem to be enough to please investors. On a generally accepted accounting principles (GAAP) basis, its per-share loss expanded from $0.14 to $0.16, which missed estimates at $0.14.
NASDAQ: OPEN
Key Data Points
What's next for Opendoor
In her shareholder letter, CEO Carrie Wheeler said, "As we enter 2025, we are observing a particularly slow start to the year, with signs of a worsening macro environment compared to 2024." Opendoor is likely to need help from the overall housing market to turn profitable, as its business model is unproven even in a healthy environment.
For the first quarter, it expects revenue of $1 billion-$1.075 billion, which is below estimates of $1.15 billion. It also expects an adjusted EBITDA loss of $40 million-$50 million, compared to a $50 million loss in the year-ago quarter.
At this point, Opendoor is unlikely to be a winner without some help at the macro level. If interest rates come down, the stock could surge, but until then, investors should expect the company to keep struggling.
