Shares of Opendoor Technologies (OPEN +1.11%) have shot up as much as 81% this week, according to data from S&P Global Market Intelligence. As of 1:29 p.m. ET Friday, Aug. 15, Opendoor stock is up 68.7% from last Friday's close.
The real estate platform and iBuying company is seeing renewed interest from investors as a meme stock and recently announced a search for a new CEO. As a darling of the 2021 SPAC craze, Opendoor shares are down 90% from all-time highs, but are up over 100% year to date (YTD).
Here's why Opendoor stock was soaring this week.
NASDAQ: OPEN
Key Data Points
Announced CEO search, meme stock mania
Opendoor has turned into a meme stock due to its high short interest, which sits at an estimated 23% of its outstanding shares. High-profile investors have begun to promote the stock on financial media outlets, which has driven the share price higher and with major volatility.
This kept driving Opendoor's stock up higher this week. Now, the company has announced the retirement of current CEO Carrie Wheeler and a search for a new leader for the company.
It is unclear why a new manager was wanted now, but this has gotten meme stock investors even more bullish and sent the stock higher in trading today.
Image source: Getty Images.
The numbers behind Opendoor
Opendoor stock is one of the best performers of this summer. However, its financials do not back up this story.
Last quarter, Opendoor reported revenue of $1.6 billion, gross profit of just $128 million, and a net loss of $29 million. The company has never generated positive net income, with a $300 million net loss over the last twelve months.
Opendoor's business model revolves around buying homes from people, fixing them up, and selling them on the open market, hopefully at a higher price. This is what's known as home flipping, with iBuying taking this model from individuals and bringing it to a national scale. So far, Opendoor has not proven it can actually scale this model and generate a profit.
Its revenue is down well from all-time highs. The company is struggling to grow because of the debt needed to finance home purchases, which puts it in a bit of a pickle.
This is not a good business model, and no matter who the CEO is, you cannot change the difficulties of home flipping. Opendoor remains a meme stock, but it is not a great long-term investment.
