Opendoor’s Rally Crashes Back to Reality—What Went Wrong This Week?

Another hype train derails as Opendoor's stock surge hits a wall. Here's why the 'disruptive' darling of iBuying stumbled—and why Wall Street's short attention span moved on.

The iBuyer's Hangover

After a sugar rush of speculative buying, reality bites. Opendoor's 'frictionless' home-flipping model faces the oldest enemy: market gravity.

Algorithms Meet Human Skepticism

Automated valuations work until they don't. When Zillow's algorithm blew up in 2021, Opendoor swore theirs was different. Cue nervous laughter from bagholders.

Bonus Finance Jab: Nothing unites bulls and bears like watching a 'tech-powered' real estate play discover that houses are, in fact, physical objects.

Image source: Getty Images.

Is the Opendoor rally dead?

On Monday, Opendoor said it WOULD adjourn a special meeting of stockholders that was intended to determine if the company should execute a reverse stock split.

The company had made the announcement about a reverse stock split back in May when the stock was trading below $1 a share. It received a letter from the, saying that its share price had been below $1 for 30 consecutive business days, putting it out of compliance with the exchange's standards.

The shares are now above $1, and the company said in a press release that due to the recent volatility in the share price, it thought it was better to allow for more time to assess market conditions before determining whether to go forward with the reverse split.

That announcement may have reminded meme investors of the reality facing Opendoor, as a reverse stock split is typically a last-ditch effort from a company to stay relevant.

What this week's slide means for Opendoor

Opendoor's trading volume had soared earlier in July as the stock boomed, nearly reaching 2 billion shares on July 21, the day the stock peaked. Since then, it's declined by about 40%, and volume has returned to pre-meme stock levels, a negative sign.

Opendoor is set to report second-quarter earnings on Aug. 5. That could provide a catalyst for a recovery, but given the weakness in the housing market, its results are unlikely to impress. Analysts are calling for flat revenue at $1.5 billion and a loss per share of $0.02, a modest improvement from $0.04 in the quarter a year ago.