Shares of Opendoor (NASDAQ:OPEN) stock are getting absolutely crushed this morning, down over 25%. The digital real estate platform reported fourth-quarter earnings and investors were not happy with what they saw. During the period, Opendoor reported earnings per share (EPS) of -$0.13, which was slightly better than the consensus estimate of -$0.18. Revenue also rose an astonishing 1,435% year-over-year (YOY), coming in at $3.8 billion. However, profitability remains an issue for OPEN stock. The company reported a net loss of $191 million, which was greater than its year-ago net loss of $54 million.
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In addition, Opendoor purchased 9,639 homes during the quarter, reflecting a year-over-year increase of 387%. However, many investors are concerned that the company’s strategy of buying homes and then flipping them may backfire. This is because the median sales price of houses sold in the U.S. is near an all-time high. If the housing market happens to correct, Opendoor could be sitting on massive losses.
CEO Eric Wu commented on the future of the digital real estate company:
“It is our fundamental belief that in a matter of years, millions of homebuyers and home sellers will pick a simple, certain, and fast experience and transact themselves, completely online. More importantly, we know Opendoor’s digital, seamless experience is and will continue to be what consumers choose now and for decades to come.”
With the company’s Q4 earnings in mind, let’s take a look and see how Wall Street feels about OPEN stock.
3 Analysts Weigh In on OPEN Stock
- Citi has a price target of $40. Analyst Nicholas Jones states that Opendoor opens the path for home sellers to conveniently sell their homes. The analyst also sees a “large opportunity for OPEN that is in its early days.”
- Credit Suisse has a price target of $30. Analyst Stephen Ju calls Opendoor a “category leader in a large and underpenetrated total addressable market (TAM).” In addition, the analyst raised his estimate on the number of houses sold by the company during 2022 from 27,000 to 34,000. However, the increase in houses sold may be offset by a near-term decrease in contribution margin to between 4% and 6%.
- Lastly, Bank of America has a price target of $8 for OPEN stock. Analyst Curtis Nagle believes the company’s iBuying strategy is an “inherently risky and largely untested business model that carries low to negative margins and requires high debt to finance transactions.” Nagle also notes that home prices have been dropping and that “existing home turnover is expected to turn negative” this year.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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