Shares of Opendoor Technologies (OPEN 18.97%) jumped on Monday, finishing the day up 18.5%. The spike comes as the S&P 500 and Nasdaq Composite both finished down 0.3%.
The real estate technology company, which has recently become one of the newest meme stocks, is seeing shares recover after last week's poor earnings report.
Opendoor shares spike after last week's fall
Last week, Opendoor reported earnings showing that although top-line revenue came in above the company's prior guidance, the company is still operating deeply in the red, and that the revenue growth would reverse and decline sequentially for the next quarter.
This led to calls from the activist investor and hedge fund manager Eric Jackson -- a key figure and catalyst in Opendoor's meme stock run -- for the company's board to replace CEO Carrie Wheeler. His view, which appears to be held by many of the retail investors driving Opendoor's recent success, is that the company is sitting on a vast amount of data that could turn Opendoor into an artificial intelligence (AI)-powered real estate powerhouse.
Image source: Getty Images.
In the earnings call, Wheeler addressed operational updates but did not lay out a path to an AI-first platform. On Friday, she took to X to better engage with the retail base, giving some investors hope that their concerns will be addressed and AI will become a focus.
Opendoor is high risk
Opendoor's model is highly sensitive to interest rates. Investors are hoping its bottom line will benefit from lowered rates, which are looking more likely after last week's weak jobs report. While this is true, it is possible that those rate cuts would be accompanied by a softening economy in which housing prices could diminish. Opendoor operates in an extremely capital-intensive space, has mostly negative free-cash flows and significant debt, and has yet to turn a profit. I would avoid this stock.
