I first became interested in Opendoor during the summer of 2022 when the share price was trading in the $4-5 range. The SPAC boom / bust was well underway and many deSPAC companies were trading well off their highs. Philosophically I like to invest in companies that are solving very hard problems and OPEN intrigued me with their approach to modernizing the real estate sales process. Access to detailed information online had dramatically improved some aspects of the RE shopping experience, however it was still very much locked into the old patterns and complexity (for understandable reasons). Opendoor does a pretty good job of summarizing that process in this slide.
Unlike most people, I have personally bought and sold houses without an agent several times, so I am very comfortable with the process. I am not a real estate professional, but I am very comfortable with finances and investments. While I recognized that the Opendoor solution is capital intensive, I was intrigued by the idea of creating a true 3rd party marketplace where buyers and sellers could transact directly but sellers would still have a “backup” option plus the transaction infrastructure to simply the process. My thesis was that OPEN’s 1st party selling platform would allow them to ultimately build a viable 3rd party, capital light marketplace that would likely be very profitable. I started with a very modest share position.
One of the benefits of starting with a modest position is that it causes you to become more engaged and to start listening to the quarterly earnings calls and reading the financial statements. As everyone knows, COVID changes in Federal Reserve policies and consumer behavior did some crazy things to our real estate market. Super low mortgage rates really distorted the markets, and we have yet to fully recover from the damage that policy created.
In any case, the prior CEO and management team of OPEN made some “near death” mistakes and overpaid to buy houses that were selling for extreme prices. They almost bankrupted the company. I do think they saved the brand by honoring their contracts to buy those houses even though they took losses for an extended period of time. I see periodic commentary that Eric was a visionary and should be brought back but I say no thank you. He had his opportunity to run the company and nearly killed it.
Historically Opendoor management has provided very minimal details about what they are actually doing during each quarter. When Datadoor offered a promotional price to their detailed tracking site I took the opportunity to subscribe so I could track the listings (embedded margins by monthly cohort) and sales (predicted gross margins by monthly cohort). If you are a longer-term or sizable investor in OPEN I highly recommend it.
https://datadoor.io/dashboard/atoms/listings
After Carrie Wheeler became the CEO, she spent quite a bit of time cleaning up the mess that was left and reducing costs. I think they made some good decisions and some bad ones along the way (not a fan of outsourcing too much IT to India personally). The notion of “eating basis points for breakfast” and driving down internal costs is useful but once you start tracking the details of the business it was clear the company needed to scale up their volumes if they wanted to be profitable. The challenge was that high interest rates and high home prices are a terrible mix and that caused lots of problems where the average holding period for a house could be much longer than prior periods. The company was also risk averse and that is understandable but also VERY FRUSTRATING in the context of other investments that were doing incredibly well. The level of frustration in the Datadoor discord was incredibly high and people bemoaned the opportunity cost of investing in OPEN when they could have invested in other companies that were doing really well.
Originally 2024 was the year when OPEN was expected to ramp up purchases and achieve break-even levels of profitability. Unfortunately, the macro conditions and corporate risk management approach didn’t allow that to happen. Carrie received plenty of criticism for playing defense and not being a “visionary” leader. I have reserved judgement because sometimes making the right long-term decisions isn’t popular in the short term. I think efficiency is very important but ultimately the company needed a viable plan to generate “capital light / higher margin” revenues. Either via their 3rd party marketplace or other options. In 2025 Carrie rolled out the Key Agent program to allow the company to monetize a larger percentage of their opportunities. She has stated that the company thinks all homebuyers should start their sales process with an offer from Opendoor. I agree. However, the current cash offer is a niche product as long as the spreads are high.
SUPER IMPORTANT graph to understand
The graph above is incredibly important because it is both simple and logical. To start, they include “True sellers” which means they only include houses where the seller got an offer from Opendoor and ultimately that house was sold (in some reasonable window of time after they got an offer). That excludes the people who are just curious and not really high intention sellers. If OPEN lowers their spread to what THEY THINK is 0%, even then they might only capture 40% of sellers. That surprises me it is so low, but I guess many people think their house is worth more. In any case, for the past 1-2 years OPEN has been offering sellers prices with VERY WIDE spreads hence the low volumes and lack of scale to achieve profitability. They could choose to reduce spreads at any time if they wanted to ramp up volumes, but they would taking on far greater exposure to home prices when those prices are elevated and there is tremendous macro uncertainty. No thanks.
How do they change the story in material way? Product innovation that builds on their existing capabilities and partnerships with Key Agents and home repair contractors. Introducing the “Cash+” program. https://www.opendoor.com/cash-plus
I believe this is a game changer offering. By splitting the settlement into two portions they accomplish many benefits for the seller, for Opendoor and for their Key Agent partners.
1. The seller gets cash quickly to be able to buy a new place without complications. They eliminate the massive hassle of staging and showings, funding repairs or the risk of not closing because of buyer problems. This is the “easy button” that customers love but are hesitant to take because of the missed “upside” of selling for a higher price. The second settlement “Plus” removes that barrier. It’s almost a no-brainer decision in my opinion.
2. Opendoor must be transparent about what they think a house will sell for and how long that process might take. They must recover all the true holding costs (interest, insurance, HOA fees, repairs, etc.) in a way that is fair to sellers. If done in a fair way I believe they will be able to pay the original seller a substantial “Plus” payment. Those payments will drive the net promotor score even higher than it is today. That is the key to ramping sales growth without having to lower spreads and take more risk.
3. The Key Agents are going to LOVE having a steady stream of listings without the hassles of dealing with existing owners. Having new listings is critical and OPEN should have lots of them. The ideal situation is more income with less work for the agent. Deliver that to agents and they will grow like crazy.
If you go back to the original SPAC presentation I found this slide. The VAST majority of this slide is still true. The traditional sales process still sucks and nobody has fixed it. The only thing that Opendoor has really tweaked is the “Certain” aspect. By splitting the settlement process into two steps they have made it slightly less certain for the sellers, however they are doing so in a way that is still very reasonable.
Thoughts on investment and trading $OPEN
The start of 2025 was a brutal period for $OPEN shareholders. Relentless selling despite markets reaching all-time highs. At a certain point it became obvious that short sellers were going to force the Russell 2k index to drop $OPEN because the share price was under $1. Once I realized that I was ready to buy in size at the end of June. I dramatically increased the size of my position at 52 and 53 cents per share. My thesis was that sentiment was in the gutter, the shares were trading below book value and the worst-case scenario was a private market takeout well over $1.50 or $2/share.
Thanks to some WSB posts by long term Datadoor discord member Greg (TY for taking the time to write up your thoughts) and some Xitter promotion by Eric the Opendoor turnaround story caught lightning in a bottle in July. I could see the sentiment shifting once the share price crossed $1 and I dramatically ramped up my purchases. I was a buyer at many different price points over the last two weeks, and I only sold a few shares and $1 calls (Jan 2026) in the high 4’s. After the declines later in the week last week I added back the shares I sold and added even more after the Cash+ program was announced.
I am as eager as everyone else to learn more at the next quarterly call. Based on the Datadoor reports it is clear the company did well in Q2. That will be nice but that is NOT the main event. The real story is how Carrie intends to go on offense and actually realize the original vision of the company to transform how Real Estate is bought and sold in our country. There is plenty of uncertainty and lots of execution needed to make it happen but I’m more optimistic than I have been since my first investment back in 2022. Will $OPEN become a "generational investment?" The jury is out. Is it worth more than it is trading for now? Absolutely. Is is a meme stock that is disconnected from the value of the underlying business? Hell no.
My current plans are to hold my shares indefinitely and to exercise my January 2026 $1 calls. Why pay capital gains taxes and give up the potential for a 10x to 50x return on investment? That would be foolish. I'm sure most from the WSB community will sell far too soon. That is the nature of fast money / momentum investment. Its fine for some but not my style. Compounding winners takes patience, hard work to KNOW WHAT YOU OWN AND WHY, and a bit of luck along the way.
I have additional thoughts to share but I think this is enough for now and it’s getting late on a Sunday. Good luck everyone! Ask me questions in the comments and I’ll try and answer your questions.
