Last August and September, Opendoor Technologies (OPEN 8.16%) was one of the hottest meme stocks around. Today, while shares in the real estate iBuyer have held onto the bulk of these gains, enthusiasm for the stock among retail investors has declined significantly.
However, based on recent events, a resurgence in popularity may be underway. A recent announcement from President Donald Trump has spurred a rally for Opendoor and other housing stocks. This specific announcement may mark the start of further promising news for the housing market.
As Opendoor continues to trade on hype instead of fundamentals, the resultant sentiment shift alone may be enough to drive another meme wave for the stock. With this in mind, let's take a closer look and see whether this news should change one's long-term view on the company's shares.
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Why Opendoor shares surged on Trump mortgage bond news
On Jan. 8, Trump noted in a social media post he directed the federal government to repurchase $200 billion worth of mortgage securities. The plan entails having Fannie Mae and Freddie Mac, publicly traded but government-controlled entities, to make the purchases.
As the objective of this buyback is to drive down interest rates, shares in companies operating in the housing and mortgage markets reacted positively to the news, including Opendoor. The company's shares surged by around 5% on the day of Trump's announcement. As of this writing, the stock remained on an upward trend.
This makes sense for two reasons. First, other news points to additional efforts ahead by the Trump administration to jump-start to sluggish housing market. Second, much as past positive news has spurred outsize price moves for Opendoor, a similar bullish overreaction could arise on the heels of this news.
Another meme stock rally? It's possible, but tread carefully.
The Fannie/Freddie mortgage buyback announcement is just the tip of the iceberg. According to Federal Housing Finance Agency head Bill Pulte, the president has "between 30 and 50" other ideas to spur increased housing demand, with further announcements arriving in the weeks ahead.
NASDAQ: OPEN
Key Data Points
That's not all. In the near term, there's also potential for other types of promising macroeconomic news. For instance, positive news about inflation and interest rates. This could drive a continued rally for housing stocks, but for Opendoor shares in particular, it could potentially drive another meme stock rally.
If you already own Opendoor, this may be a sign to hold on just a little bit longer. However, for investors who do not currently own this stock, you may want to tread carefully. Although Opendoor could stay out of sync with its valuation in the near term, this could come into conflict down the road.
For instance, even the most optimistic sell-side analyst forecasts still project Opendoor to report net losses through 2027. A housing market rebound may only moderately improve fiscal performance in 2026 and 2027. There's also Opendoor's share dilution risk related to its massive warrant issuance last fall. In lieu of buying Opendoor, consider buying undervalued housing stocks instead.
