Opendoor Technologies Inc. (NASDAQ: OPEN) faced headwinds in premarket trading on Wednesday, with shares pointing to a 1.34% decline at $4.42, as a surge in mortgage rates to an 11-month high overshadowed a weekly uptick in home purchase contracts. The tension between rising borrowing costs and improving acquisition volumes sets the stage for the company's second-quarter earnings release on August 4.
The 30-year fixed mortgage contract rate climbed four basis points to 6.69%, according to the Mortgage Bankers Association, matching levels last seen in August 2025. This increase, reported on Tuesday, reflects data collected through July 18 and marks the highest rate in nearly a year. Mike Fratantoni, MBA's chief economist, indicated that mortgage rates are likely to remain elevated, pressuring affordability and potentially extending home holding periods for iBuyers like Opendoor.
Despite the rate headwind, Opendoor's preliminary acquisition agreements rose 12% week-over-week, signaling continued demand for its instant-buy service. However, the company cautioned that these figures are projected estimates that do not account for post-period cancellations, and Deloitte has not audited or reviewed the data. The weekly contract tracker, updated on Tuesday, is a key metric investors are monitoring ahead of the earnings report.
Management's guidance for the second quarter points to sequential revenue growth of approximately 25%, translating to about $900 million in total revenue. With a contribution margin target of 5% to 7%, the midpoint implies a contribution profit near $54 million—a 69% increase from the first quarter's $32 million. The company's adjusted EBITDA loss in Q1 stood at $31 million, underscoring the ongoing challenge of achieving profitability.
First-quarter results showed strong momentum, with home purchases rising 45% quarter-over-quarter and over 5,000 acquisition contracts finalized—the highest since 2022. The share of homes on the market for more than 120 days also improved dramatically, falling to 10% from 33%. CEO Kaz Nejatian emphasized the company's focus on better acquisitions, faster turns, stronger margins during the May earnings call.
However, the macro environment remains challenging. As of March 31, Opendoor's home inventory stood at $1.139 billion, while asset-backed debt totaled $1.1 billion, increasing the cost of a prolonged exit cycle. The company's market capitalization of approximately $4.3 billion equates to about 1.2 times annualized Q2 revenue, a valuation that does not yet reflect profitability. Margins and the pace of home resales remain critical variables for investors.
Looking ahead, the Federal Reserve is scheduled to meet on July 28-29, and June new-home sales data is due on Friday. Opendoor shareholders can submit questions until July 29, with the company set to announce its second-quarter results after the market close on August 4. The upcoming report must detail activity on both the acquisition and resale sides, as increased purchases provide support only if home sales continue at a healthy pace.
Risks include potential contract cancellations in the tracker, extended holding periods due to higher rates, and the GAAP loss of $173 million in Q1, which included a $100 million increase in executive market-condition stock-unit expenses. The market will be watching closely to see if Opendoor can navigate these challenges and move closer to its breakeven target.
