Shares of Opendoor Technologies (OPEN 42.31%) were soaring again today as the meme-stock tailwind that has pushed the online home-flipping stock up in recent weeks seemed to gain strength today, even though there was no company-specific news out on the stock. The notion that Opendoor could be the next Carvana seems to be picking up steam online in social media forums like X and Reddit, and trading volume in the stock has soared.
As of 1:59 p.m. ET, the stock was up 35.1%.
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Opendoor gets the meme treatment
Opendoor has performed remarkably over the short term as the stock has now nearly tripled in just the last few weeks.
Opendoor has historically been volatile, and it had fallen into penny stock range at a price of under $1 so some fluctuations in the share price are understandable, but it now appears that the momentum from a snowballing group of retail investors is pushing the stock higher.
A post on Reddit's WallStreetBets in May seems to have planted the seed for the recent rally. In a post titled, "Opendoor is the next Carvana," which now has more than 1,000 comments, one user said he bet $155,000 on Opendoor, and laid out an argument for recovery with a change in its business model, and the short-term impact of hedge funds closing their short bets at the end of the second quarter.
A short squeeze may have also helped fuel the stock's gains today as 24% of the float was sold short as of mid-June, and the stock is seeing unusually high volume today with more than 219 million shares traded as of 2:30 p.m. ET, higher than in any session in the last year, and well above the 90-day average of 84.8 million.
Where does Opendoor go from here?
Notably, the recent gains have been unrelated to anything going on with the business.
Opendoor gained yesterday even as the June Consumer Price Index (CPI) report made it less likely that the Federal Reserve will cut interest rates. At this point, the stock seems to have become divorced from the fundamentals of the business, which is generally a bad sign for the long term.
While momentum and meme-stock mania could push Opendoor higher, long-term investors are better off sitting this one out.
