Opendoor (OPEN 6.74%), the largest instant home-buyer (iBuyer) in America, saw its stock close at a record high of $35.88 per share on Feb. 11, 2021. Today, it trades at just $5 with a market cap of $4.65 billion -- which values it at less than one times this year's sales. Let's see why its stock is trading at bargain-basement valuations -- and if it's worth buying right now.
Why did Opendoor's stock drop?
Opendoor uses its AI algorithms to make instant cash offers for homes. It fixes them up and relists them on its own marketplace. That business model thrives when interest rates are low and the housing market is hot, but it shrivels when interest rates spike.
Image source: Getty Images.
Opendoor's revenue surged during the post-pandemic housing boom. But from 2022 to 2024, its revenue plunged from $15.6 billion to $5.2 billion, its number of homes bought dropped from 34,962 to 14,684, and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin fell from negative 1.1% to negative 2.8%.
That jarring slowdown can be attributed to the Federal Reserve's 11 consecutive interest rate hikes in 2022 and 2023, which quickly chilled the red-hot housing market.
In the first nine months of 2025, Opendoor's revenue declined another 11% year over year to $3.6 billion, while it purchased only 6,535 homes. However, its adjusted EBITDA margin improved to negative 1.1% as it trimmed its workforce and reined in its expenses.
NASDAQ: OPEN
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Why could it be an undervalued turnaround play?
Opendoor doesn't expect the housing market to warm up anytime soon, even after the Fed cut its benchmark rate six consecutive times in 2024 and 2025. For 2025, analysts expect its revenue to decline 18% to $4.2 billion, with an adjusted EBITDA margin of negative 1.9%.
Yet a few catalysts are on the horizon. Opendoor recently brought in Kaz Nejatian, the former COO of Shopify (SHOP 2.44%), as its new CEO. Its co-founders, Keith Rabois and Eric Wu, also returned to the board, and Jane Street disclosed a new 5.9% stake in the company.
As Opendoor waits for the housing market to warm up again with those new leaders and fresh institutional support, it's upgrading its AI algorithms to price its properties more accurately, and signing more listing partnerships with home builders, real estate platforms, and agents. It's also expanding Opendoor Exclusives, its new marketplace that directly connects sellers to buyers, bypassing its capital-intensive iBuying process.
From 2025 to 2027, analysts expect its revenue to grow at a 27% CAGR to $6.8 billion, with adjusted EBITDA turning positive in the final year. If that happens, its stock could be grossly undervalued relative to its growth prospects. Therefore, I think it might be smart to nibble on Opendoor's stock before the housing market fully recovers.
