Opendoor stock price has surged in the past few months, moving from the year-to-date low of $0.5035 in July to $4.45 today. This surge has transformed its market capitalization from over $350 million in June to $3.27 billion today.
Why the Opendoor stock price has surged
There are three primary reasons why the OPEN stock price has surged in the past few weeks. First, it has become a victim of a short-squeeze as companies like GameStop and AMC did a few years ago.
It is an ideal for a short squeeze because, at its lowest level this year, the stock was down by over 90% from its all-time high. It also has one of the biggest short interest in the United States, with its figure standing at 21%.
Opendoor’s stock price surged after Shrisha Radhakrishna, a company executive, bought 30,000 shares worth over $128,000 last week. This marks the first time that an insider has bought the shares in the last 12 months. In this period, executives have implemented 14 sell trades of over 2.56 million shares.
READ MORE: Can Opendoor stock really hit $82? The math behind it raises questions
Insider purchases are a good thing for a company, as they signal that the company is confident in itself since they often know more details than the broader investing community.
Opendoor share price also jumped after the company published better-than-expected financial results. Its revenue rose to $1.51 billion in the second quarter of 2024 to $1.567 billion in the most recent quarter. This growth happened even as the company sold 128 houses, lower than the 129 it sold in the same period last year.
Opendoor’s profit also continued to improve. While it dropped from $95 million last year to $69 million in the recent quarter, it has increased in the last three consecutive quarters.
Analysts also expect that the company’s business will continue improving this year, with the annual revenue coming in at $4.05 billion, followed by $4.39 billion next year.
The annual revenue this year will be much lower than what it made last year as the weakness in the housing sector persists and its ongoing pivot from an iBuyer market to one that relies on agents. In a statement, the CEO said:
“With mortgage rates hovering in the high 6% range and affordability near all-time lows, buyer demand remains persistently weak. Only 12% of consumers expressed that it is a good time to buy a home, and sellers currently outnumber buyers by the widest margin in over a decade. This has led to low clearance rates and a decade high delistings.”
OPEN stock price analysis
The daily timeframe chart shows that the Opendoor share price surged this year, reaching a high of $5.83 last month. This surge happened as it moved to the markup phase of the Wyckoff Theory, where demand surges.
The stock then formed a golden cross as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other. This golden cross is one of the most bullish patterns in technical analysis.
The Relative Strength Index (RSI) has formed a bearish divergence, while the MACD lines are nearing their crossover. Therefore, the stock will likely pull back as investors start to book profits, potentially to the support level at $3.
The risk, however, is that the company is still highly shorted, meaning that it can be a candidate for a short-squeeze.
READ MORE: Opendoor stock price is soaring as we predicted: what now?
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