Shares of Opendoor Technologies (OPEN +21.72%) soared on Monday, finishing the day up 21.5%. The jump comes as the S&P 500 (^GSPC +1.54%) gained 1.5% and the Nasdaq Composite (^IXIC +2.27%) rose 2.2%.
Opendoor reported its first quarterly earnings on Friday since CEO Kaz Nejatian took the reins in September. While the numbers were mixed, investors were satisfied given Nejatian's vision for the company.
NASDAQ: OPEN
Key Data Points
Opendoor beats on the top line
The company narrowly missed Wall Street's earnings-per-share (EPS) target, reporting a loss of $0.08 per share when a $0.07 loss was expected. And while it did manage to deliver $915 million in revenue when $850 million was expected, that still represents a 34% decline from the same period last year.
Investors appeared to look past the numbers, however, focusing instead on Nejatian's vision for the company's future. Retail investors have been advocating for Opendoor to better leverage its data using artificial intelligence (AI) for some time. Nejatian's AI-driven plan to cut costs and drive revenue was well received.
Image source: Getty Images.
Further helping lift shares, weak jobs data for October could mean the Federal Reserve cuts rates once again in December. Opendoor's business directly benefits from lowered rates.
Opendoor still has a lot to prove
While the digital real estate disruptor operates in a market with genuine potential for innovation, the economics of its model remain unproven. The company is operating at a loss and relies heavily on debt. I would avoid the stock unless you have a exceptionally high risk tolerance.
