Opendoor stock (NASDAQ: OPEN) took a major hit on Wednesday, as it plunged nearly 21% after a disappointing Q2 earnings report and a gloomy forecast for the next quarter.
Shares dipped below $2 during the session, giving back a big part of the wild gains it racked up during last month’s meme-stock surge.
The sharp sell-off shows how quickly the mood can change when investors shift their focus back to the company’s actual numbers.
Opendoor is feeling the heat. Despite posting $1.6 billion in second-quarter revenue, up slightly from last year, investors weren’t impressed.
The company also reported a $29 million net loss, but it was the third-quarter guidance that really sent the stock tumbling. Opendoor expects revenue to drop sharply, landing somewhere between $800 million and $875 million.
That’s a 36% slide from a year ago, and it speaks volumes about how much the cooling housing market is hurting its business. With mortgage rates still high and buyers sitting on the sidelines, the company is bracing for a tough stretch.
Opendoor stock: Margins down, doubts up
Investor nerves were rattled further during the earnings call when CEO Carrie Wheeler described the current backdrop as a “challenging macro environment” and revealed the company is cutting back on marketing spend to preserve cash.
She also spoke about Opendoor’s bigger shift from being just a home-flipping platform to more of a “Product to Platform” model, working more with real estate agents to broaden its services.
But that pivot raised fresh concerns, as big strategic changes like this often come with execution risks.
The numbers didn’t do much to calm fears either. Opendoor reported a negative EBIT margin of 6.5%, $279 million in negative operating cash flow, and liabilities of over $1 billion.
On top of that, the company is racing to avoid being delisted from the Nasdaq. A special shareholder vote on a reverse stock split aimed at lifting the stock price above Nasdaq’s minimum was recently delayed until August 27, only adding to the sense of uncertainty.
Price nears key support level
On the technical side, Opendoor’s steep drop to around $1.99 during the session brought it dangerously close to a key support level at $1.87.
Momentum indicators aren’t offering much comfort either, with a bearish MACD and the stock hugging the lower end of its Bollinger Band, the signals point to continued downside pressure.
Meanwhile, sky-high implied volatility in the options market suggests investors are bracing for more turbulence. In sharp contrast, other real estate tech players like Zillow managed to hold steady, even posting modest gains on the day.
That split highlights just how shaky Opendoor’s recent meme-fueled rally was and how much doubt still lingers around its ability to weather a tough housing market while pivoting to a new business model.
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