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Is Opendoor a buy?

It’s time to breakdown a new name to the market. Here is the breakdown on $OPEN, otherwise known as Opendoor Technologies.

Current Price: $26.12

52/Wk High: $32.39

52/Wk Low: $10.55

Market Cap: $14.2 Billion

Read below for the breakdown!

Opendoor ($OPEN) is a digital platform for the large residential real estate market. The company’s platform offers customers one of the most simple ways to both buy and sell residential real estate.

Furthermore, Opendoor’s management team is made up of solid leadership members of which have worked at Netflix, Trulia, GoDaddy, Citadel, Square, and Bain Capital.

Recently, Opendoor went public in late 2020 and has since been on the move, rallying a strong 58.88% in just the last three months, and for good reason considering the company’s most recent numbers.

Taking a look at Opendoor’s system, the company’s platform offers a real estate service stack, that not only gives customers the ability to buy and sell properties but access to real-time pricing data, financing, and a digital offer process.

Something even more unique about Opendoor is the fact that the company will also offer sellers the option to accept a cash offer from Opendoor itself. Allowing Opendoor to essentially fix any issues with the property and flip it themselves.

Digging into the numbers, Opendoor turned out $4.7 billion in revenues throughout 2019, representing an increase of 158%. On the downside, 2020 revenues so far have lagged, totaling $1.995622 billion in the first six-months of 2020, representing a decline of 12%.

Although, when it comes to 2020 revenues it is important to note that the decline in revenues according to management was a result of the COVID-19 pandemic and lower sales volumes.

Furthermore, Opendoor is currently in 21 markets and has served over 80,000 homeowners thus far. Given Opendoor’s rapid growth, the company has sold more than $10 billion in homes since its inception in 2014 and is just getting started.

When it comes to homes sold, Opendoor sold 18,799 homes in 2019, representing a 152% increase throughout FY 2019. As for 2020, the company sold 7,832 homes in the first half of 2020, so it is safe to say the company has some work to do.

As for the future, Opendoor hopes to hit $9.8 billion in revenues by 2023, as well as sell a total of 37,689 homes in FY2023 as well.

Further looking to the future, Opendoor’s current playbook is to achieve a run rate of $50 billion in revenues, reach 100 markets, and a 4% market share in the near future.

As for the market itself, the US market has plenty of potential boasting five million homes sold annually and $1.3 trillion in market value. Not only that but as of mid-2020, the real estate market was only 1% online, much less than for example the retail market.

Shifting into the balance sheet, the numbers are solid.

Total Debt: $271 Million

Total Liabilities: $376 Million

Total Assets: $1.049 Billion

Cash & Short Term Inv: $551 Million

When it comes to valuation, Opendoor does trade at a premium, with a price to sales multiple of 3.96x.

Given the numbers, the analysts are bullish, with a mean price target of $32.50/share, representing a 24.43% gain.

It is also important to note that the high price target is $34.00/share, representing a 30.17% upside, while the low price target is $31.00/share, representing an 18.68% gain.

The big money is much less involved, with just 30.95% of Opendoor being owned by institutions. Top holders include Khosla Ventures, Access Industries, and GGV Capital.

Digging into the technicals Opendoor could be presenting an opportunity. According to the six-month charts, the MACD is moving to the downside with strong momentum within a range of 0.7097 down to 0.3228.

The six-month charts are also indicating an RSI of 48.79 and CCI of -51.51, both of which are on the low end.

In short, Opendoor is a solid company with a bright future as the real estate market goes digital, but management needs to get its numbers back on track and continue its expansion into new US markets.


Disclaimer: This is not direct financial advice, simply an opinion based on independent research.

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