Shares of Opendoor Technologies (OPEN 10.97%) fell on Wednesday, finishing down 11%. The slide came as the S&P 500 (^GSPC +0.38%) gained 0.3% and the Nasdaq Composite (^IXIC +0.59%) rose 0.5%.
The real estate company Redfin released a report yesterday detailing a soft housing market, with sales and listings plateauing.
NASDAQ: OPEN
Key Data Points
Open needs to move its inventory
Redfin reported that home sales and new listings were little changed in October from the month before and that "housing-market activity is plateauing as Americans grapple with high costs and economic uncertainty." The company said that while the last few years have seen the market slow, this "past year has been especially stagnant."
Image source: Getty Images.
That's a problem for Opendoor, which sits on billions in housing inventory that it needs to move. The company's top and bottom lines are negatively impacted by the slowed activity.
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 an exceptionally high risk tolerance.
