Why Opendoor Stock Is Down Today

The Motley Fool · 2d ago

Key Points

  • Opendoor stock is sinking on Friday after the home-flipping company reported less-than-stellar third-quarter earnings on Thursday.

  • Sales rose 12% to $1.02 billion, but gross margin fell to 3.7% from 7.2% a year ago, and the net loss grew to $218 million from $90 million.

  • Management said its goal of positive adjusted net income by the end of the year is behind schedule, and I’m not sure I share the CEO’s growing confidence in the company.

Opendoor Technologies (NASDAQ:OPEN) stock is sinking, down 22.3% as of 2:12 p.m. ET on Friday, Nov. 6, after the home-flipping company reported less-than-stellar earnings after the bell yesterday.

The S&P 500 (SNPINDEX:^GSPC) and the Nasdaq Composite (NASDAQINDEX:^IXIC) are up 0.6% and 1.1%, respectively.

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Opendoor earnings: more homes bought, thinner margins

Opendoor -- which buys houses directly from sellers and resells them -- released results after the close on Thursday. Top-line sales rose 12% year over year to $1.02 billion. However, gross margin fell to 3.7% from 7.2% a year ago, and the company's net loss grew significantly -- $90 million last year to $218 million.

A row of townhouses.

Image source: Getty Images.

On the call, management blamed a slow housing market and said its previous goal of positive adjusted net income by the end of the year is now behind schedule.

Can Opendoor stock handle higher interest rates?

A positive jobs report also hurt the stock today. When the job market is healthy, it gives the Federal Reserve less reason to hold back on raising rates to tackle inflation. And higher rates don't tend to help an already slow housing market. It also increases the company's financing costs and eats into its bottom line.

CEO Kaz Nejatian says he's more confident in the company than he was a year ago. I'm not sure I am.

Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.