Latest Developments:
Opendoor Technologies (OPEN) reported $1.37 billion in 3Q24 revenues, a 40.51% YoY growth but a 8.87% QoQ decline. Despite strong revenue performance, gross margins fell to 7.63%, and the company expects negative EBITDA. The housing market, combined with high-interest rates, presents significant challenges, and OPEN’s liquidity is stretched, leaving little runway.

Investment Case:
The housing market slowdown, compounded by high interest rates, is likely to continue weighing on OPEN’s performance. The company’s capital-intensive business model, coupled with weak margins, makes it hard to achieve profitability. Its recent layoffs and cost-cutting measures highlight the ongoing struggles, and its liquidity profile raises concerns about the company’s ability to sustain operations without additional funding.

Valuation:
Despite a more than 90% drop in share price since its peak, OPEN remains overvalued. Valuation analysis suggests a potential downside of more than 30%, with an implied share price range of $0.83 to $1.37. Investors should be cautious as OPEN’s business model and market conditions suggest further downside risk.

Disclaimer: The above is an excerpt on a report written by our close associate, Selendis Research. Interested parties may check out the full report here on Seeking Alpha. All information provided is intended solely for general informational purposes. Seven Insights does not take into account individual financial goals or situations and does not provide personalized investment advice. Seven Insights is not a licensed securities dealer, broker, U.S. investment adviser, or investment bank.