Shares of Opendoor Technologies (OPEN -12.50%) are falling on Tuesday, down 6% as of 3:03 p.m. ET and dipping as low as 16.8% earlier in the day. The drop comes as the S&P 500 (^GSPC 0.36%) and Nasdaq Composite (^IXIC -0.39%) were little changed.
Opendoor's stock is retreating after its recent monster run. The stock appears to be the latest meme stock, and its ascent has been largely driven by a surge of retail investor activity.
The latest meme stock
Opendoor Technologies, a technology company that automates the buying and selling of real estate, has become the latest meme stock. Retail investors, especially those from Reddit's Wallstreetbets subreddit, have driven the stock up nearly 440% in the last month. The run started after hedge fund manager Eric Jackson of EMJ Capital publicly announced his firm had taken a position in Opendoor, touting it as a potential "100-bagger" stock.
The timing comes at a critical time for Opendoor. The company's stock was trading under $1 and had received a delisting warning from Nasdaq -- companies that can't keep their stock price above $1 risk being kicked off the exchange.
Image source: Getty Images.
Risks remain for Opendoor
Despite the enthusiasm, Opendoor has significant financial troubles. The company's top line has plummeted from its height in 2022. The company's current annual run rate is well under a third of its 2022 sales. Opendoor has also never turned a profit and has significant negative cash flow.
There are some positive signs as of late, including a quarter-over-quarter uptick in its top and bottom lines from its Q4 2024 to Q1 2025, as well as positive movement in its earnings before taxes, interest, depreciation, and amortization (EBITDA).
Its meme status is based on the belief that this momentum can continue, and the company can execute a turnaround. I'm not so sure, and I would avoid the stock, especially after this incredible run.
