Opendoor stock price has gone parabolic this year, adding over $5.8 billion to its market capitalization. OPEN jumped to a high of $10.70 last week, up by over 1,972% from its lowest level this year.
The ongoing short-squeeze has made it the poster child of the ongoing meme stock season.
Opendoor stock price short-squeeze continues
Opendoor Technology is a top company in the real estate industry that simplifies how people buy and sell homes. The company enables users to sell their homes directly to it for cash, bypassing traditional approaches.
It then improves the houses, and sells them for a profit, just as other house flipping professionals do. The company also makes it possible for sellers to list their properties on the platform.
Opendoor has been one of the top casualties of the recent performance of the real estate industry, which nearly halted the house-buying process.
The company’s revenue peaked at $15.5 billion during the pandemic as investors cheered the lower interest rates from the Fed. It then plunged to $6.9 billion in 2023 and $5.15 billion last year.
Opendoor’s losses have also been substantial, raising concerns about the stability and performance of the houseflipping business.
Federal Reserve interest rate cuts and turnaround
Opendoor’s business made some improvements in the second quarter as its revenue rose by 4% to $1.6 billion and the number of homes sold rose slightly to 4,299.
The company also narrowed its losses to $29 million from the $92 million it lost in the same period last year. It also improved its inventory and purchased many fewer houses.
These results partly explain why the OPEN stock price has surged in the past few months.
The other reason is that investors anticipate it to do much better in the coming months as the Federal Reserve is expected to start cutting interest rates this week.
Morgan Stanley analysts expect it to cut rates two more times this year and many more times in 2026 as Donald Trump replaces Jerome Powell as the Federal Reserve chair. Lower rates will likely incentivize more house purchases in the US.
Most importantly, investors are betting on its turnaround. Its founders have returned to the board, and a new CEO has started her tenure.
The company has pivoted its business from the capital-intensive home-flipping business towards a distributed platform that matches buyers and sellers. It also expanded the Opendoor Marketplace solution to act as a transaction platform.
Opendoor has reduced its inventory, introduced more dynamic pricing, and boosted its revenue diversification efforts.
The Opendoor stock price has also soared because of the substantial short interest that has made it popular among social media users on platforms like Reddit and StockTwits. It has a short interest of 20%, sending memories of other popular meme stocks like AMC, Blackberry, and GameStop.
OPEN stock price technical analysis
The daily timeframe chart shows that the OPEN stock price has been in a strong uptrend in the past few weeks, moving from a low of $0.4700 in July to $9 today.
This short squeeze has pushed it much higher than all the moving averages, while its oscillators like the Relative Strength Index and the MACD have become highly overbought.
Therefore, the most likely scenario is where the OPEN stock price continues rising towards the Federal Reserve interest rate cuts and then suffer a major reversal later this year or in 2026.
History shows that meme stocks surge for a while and then plunge. For example, companies like AMC and GameStop remain much lower than their all-time highs.
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