Shares of Opendoor Technologies (OPEN 7.58%) are moving higher on Tuesday, up 8.2% as of 1:24 p.m. ET, and had moved as much as 15.6% earlier in the day. The spike comes as the S&P 500 and Nasdaq Composite gained 0.9% and 1.1%, respectively.
After a monster meme-stock rally in July, the real estate technology company's stock fell last week following underwhelming Q2 results. It's back on the move this week as investors believe the company's management may be listening to their concerns.
Activist investor continues to fuel Opendoor's stock rally
Last week's earnings release showed weak revenue growth and continued net losses, though that loss is shrinking. The company also reported its first positive quarter of earnings before interest, taxes, depreciation, and amortization (EBITDA) since 2022. CEO Carrie Wheeler addressed concerns over the weak earnings, saying that the housing market continued to deteriorate.
Leading up to the earnings release and immediately following it, calls have intensified for the CEO's removal. Co-founder of the company Keith Rabios called Wheeler "utterly incompetent," and EMJ Capital's Eric Jackson, the investor largely responsible for kick-starting Opendoor's meme status, has also ramped up calls for her removal.
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Jackson and the large retail investor base believe that OpenDoor is sitting on a data gold mine that could turn it into a powerhouse if the company were to pivot to an artificial intelligence (AI)-focused platform and make use of the data. In the last few days, Opendoor's management, including Wheeler, has started to more directly address investor concerns, leading to a renewed hope that the company can turn things around.
Opendoor is still a speculative play
While the theory fueling its meme-stock rally has its merits, it's still just that -- a theory. Given Opendoor's capital-intensive nature, negative free cash flow, significant debt, lack of profit, and worsening housing market, I would avoid this stock.
