Opendoor Technologies (OPEN -26.39%) stock has been plummeting since the company's second-quarter earnings report. The stock, which got notoriety earlier this year when it emerged as one of the DORK stocks, dropped 20% after the company reported both disappointing guidance and a fundamental shift in how it will operate in the future.
Obviously, Wall Street is not buying in to what Opendoor is selling. And investors should expect a period of volatility as the company adjusts from a direct-to-consumer model to one using agents.
Here's a look at Opendoor's most recent earnings report, as well as its strategic shift and what it means for investors moving forward.
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Opendoor's earnings report
By all measurements, Opendoor's second-quarter result was solid. Revenue was $1.6 billion, which was up 4% from a year ago. The company reported sales of 4,299 homes, which was up 5% from Q2 2024. Profits and gross margin were down slightly, coming in at $128 million and 8.2%, respectively, versus $129 million and 8.5% a year ago. But the company also managed to reduce its losses, posting a net loss of $29 million versus a loss of $92 million a year ago.
On a non-GAAP (adjusted) basis, the company's net loss was only $9 million, better than the net loss of $31 million in the second quarter of 2024.
However, the market is reacting to the company's guidance, which calls for a steep drop in revenue. Opendoor is guiding for third-quarter revenue between $800 million and $875 million. And that has to do with the company's shift in its business plan.
Opendoor's new model
For years, Opendoor's business plan has been a direct-to-consumer model, allowing people to sell their homes for cash. The company made money by buying property directly from the homeowner, making needed repairs and selling them for a profit. The company also charges a service fee, which usually runs around 5%, plus closing costs.
However, the company started shifting to a sales agent model in some markets in the first quarter and is rolling that out in its markets now. The program provides sellers with additional choices -- they can still get a cash offer, or they can have their home listed on the open market. They wouldn't get money as quickly as a cash offer from Opendoor, but they have the potential to get more from the closing.
Opendoor said that in its pilot program in the second quarter, twice as many customers received a final underwritten cash offer and were getting final offers faster because agents were doing in-home assessments. CEO Carrie Wheeler outlined the plan in a letter to shareholders.
We believe a great agent can be an invaluable guide through one of life's biggest decisions, and our path forward lies in deepening these partnerships. ... We've already done the hard work of integrating the messy, fragmented layers of the transaction across pricing, home assessment, repairs, title, escrow, and beyond. Now we're opening up that platform. When agents plug in, they gain access to our qualified leads and our capabilities, while homeowners gain more options. Opendoor is able to serve more sellers. Everyone wins.
That's a rosy assessment, but it doesn't change the fact that Opendoor's revenue guidance is roughly half of what the company saw in Q2.
Opendoor is proving it's a DORK stock
Earlier this year, Opendoor stock jumped on a lot of meme-stock buying that surrounded so-called DORK stocks. Those names are Krispy Kreme, Opendoor, Rocket Companies, and Kohl's, with the acronym coming from the first letter of each company's stock ticker. Opendoor previously had been struggling to remain over $1 per share, which is the minimum level needed to maintain its listing on the Nasdaq exchange, when EMJ Capital founder Eric Jackson predicted Opendoor could hit $82 per share.
That call attracted a lot of attention from Reddit's WallStreetBets subreddit, and the stock jumped from less than $1 to more than $3, briefly. Those gains are starting to go away now, and even though Opendoor is up 24% in 2025, the stock is down more than 90% from its all-time highs set in 2021.
Wheeler took a moment in her earnings call to thank retail investors for their newfound interest in the stock, but the company's still facing a long road. Opendoor says it will likely buy just 1,200 homes in the third quarter, down from 3,504 homes in Q3 2024, as the housing market is struggling through reduced demand and high interest rates.
The move toward agent partnerships has the potential to increase profitability as Opendoor's iBuying platform resulted in scant margins. But few real estate stocks are going to be solid investments right now in a high interest rate environment.
Jackson may eventually be proven right, but I predict that the rest of 2025 will be a period of uncertainty and volatility rather than profits. Investors should look elsewhere for more steady gains.
