Shares of Opendoor Technologies (OPEN -11.33%) have been red-hot since the end of June.
The main reason: A meme stock rally has attracted attention to the broken stock, which debuted during the tech boom in 2020 as a high-flying special purpose acquisition company (SPAC).
However, once interest rates rose in 2022, the company's business model fell apart as the housing market came to a freeze. The stock tumbled, falling to less than $1 earlier this year and putting it at risk of being delisted by the Nasdaq Composite.
In recent weeks, however, that low price has attracted interest from retail investors who spy opportunity in the stock. Hedge fund manager Eric Jackson has made the argument repeatedly on X.com that Opendoor could be the next Carvana. Carvana stock jumped by more than 100 times after avoiding bankruptcy a few years ago. According to Jackson, Opendoor stock could jump to $82 over the coming years if it gets help from the housing market.
Initially, Opendoor's surge, which began in mid-July, seemed entirely driven by meme stock investors. At one point, daily trading volume exceeded shares outstanding. But after a pullback, the stock is building momentum again -- except this time, there is real news driving its rally.
First, shares jumped on Aug. 1, on a disappointing jobs report because investors believed that made it more likely the Fed would cut interest rates, leading to lower mortgage rates. Then, after pulling back on its second-quarter earnings report, Opendoor got a boost from falling mortgage rates, which hit a nine-month low. The stock gained again on Aug. 15 after the company announced that CEO Carrie Wheeler would be stepping down from the top job.
The stock rose as much as 16% on Aug. 15 on that news before finishing up 4.3%.
Image source: Getty Images.
A changing of the guard
In a press release, Opendoor said it had appointed Shrisha Radhakrishna, the company's Chief Technology and Product Officer, as President and interim leader of the company while it searches for a new CEO. The succession process had begun earlier in the year as part of what the company called a "strategic evolution."
Wheeler had faced a lot of pushback from company insiders, including co-founder Keith Rabois. Wheeler was CFO before taking over as CEO in December 2022, and some investors believe that a CEO with experience running a disruptive tech company could be a better fit for the job.
The stock performance under Wheeler leaves a lot to be desired, but it's hard to fault her for weak results during the worst housing market of the last 30 years.
Does this change anything?
We may be seeing the effect of the meme stock investors in Wheeler's departure, although the company said that it had agreed on a succession plan earlier in mid-2025.
However, the surge in the stock and the interest from the retail investor base should make it more enticing to a new CEO, who will likely receive stock and options as part of their compensation package. As a job, the Opendoor gig looks considerably different than it was when the company was on the verge of being delisted.
The next CEO will be fighting an uphill battle. Even if the Fed lowers interest rates at its September meeting, it could take at least a year or two for housing market activity to start to pick up.
Still, the next CEO will have high expectations set on them from the get-go. Investors should remember that because of its exposure to mortgage rates and the housing market, the next CEO's influence will be less than it would be for the average company. Macro factors are likely to determine the company's recovery potential.
Still, the retail investor base could easily send the stock higher from here. At this point, it still seems far-fetched to call Opendoor the next Carvana, as there have not been any significant improvements in its business. But if mortgage rates continue to fall, Opendoor stock should keep climbing.
