Shares of Opendoor Technologies (OPEN 18.77%) jumped on Monday, up 18.8% as of market close, and had moved as much as 24.6% earlier in the day. The spike comes as the S&P 500 (^GSPC -0.01%) and Nasdaq Composite (^IXIC 0.03%) were little changed.
After a monster meme-stock rally in July, the real estate technology company's stock fell hard following its latest earnings. The rally is back on, however, after Opendoor announced its CEO would step down, a move greeted with enthusiasm from its retail investor base.
Opendoor's CEO is out
CEO Carrie Wheeler is stepping down after facing increasing pressure to do so from vocal activist investors and a wide swath of the company's retail investors, who have been driving the stock's success in recent months. EMJ Capital's Eric Jackson, the investor largely responsible for igniting the original meme rally, was very vocal about his displeasure with Wheeler's handling of the company. Opendoor's co-founder, Keith Rabois, echoed Jackson's calls and called Wheeler "utterly incompetent."
The retail rally is centered around the idea that Opendoor could transform its business with AI, using its extensive proprietary data. In the company's announcement, AI was heavily featured, saying it was "well positioned to focus on its considerable data and unique assets in today's high-tech AI world."
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Opendoor is still a speculative play
Opendoor operates in a very capital-intensive space, has negative free cash flow, significant debt, and is in the red. I am suspicious of its long-term value, especially if the housing market worsens, which is entirely possible.
