Opendoor Technologies Inc. faced a challenging session on Monday, with shares declining 2.6% to $4.88 as investors weighed the company's latest financial results and the outlook for its turnaround plan. The iBuyer reported a first-quarter net loss of $173 million, more than double the $85 million loss recorded in the same period last year, while revenue fell to $720 million from $1.15 billion.
The company's home inventory stood at 3,420 homes at the end of the quarter, less than half the level a year earlier, reflecting a deliberate strategy to reduce exposure to a sluggish housing market. Sales of 1,921 homes were outpaced by purchases of 2,474, but the gap narrowed from previous quarters. Chief Executive Officer Kaz Nejatian emphasized that resale speed has improved and aged inventory has declined, calling the changes structural and stating, "The machine is working."
Key Financial Metrics
Gross margin improved to 10.0% from 8.6% year-over-year, but contribution margin edged down to 4.4% from 4.7%. Adjusted EBITDA loss widened slightly to $31 million from $30 million. The company is targeting breakeven adjusted EBITDA in the second quarter, a critical milestone as it seeks to prove the viability of its business model.
Strategic Shift
Nejatian acknowledged that Opendoor's previous reliance on home-price forecasts was a "fatal flaw," according to comments reported by HousingWire. The company has shifted to a faster pricing approach, aiming to reduce holding periods and improve margins. Acquisition contracts more than doubled sequentially and reached their highest level since 2022, signaling growing confidence in the new strategy.
Market Challenges
The broader housing market remains a headwind. Mortgage rates are still elevated in the mid-6% range, affordability is stretched, and existing-home sales hover near a 30-year low. These conditions slow transactions, keep homes in inventory longer, and increase financing costs for Opendoor's holdings. The company's quarterly filing noted that the U.S. housing market remains tight, with high rates dampening activity.
Competitive Landscape
Competition in the iBuying space has eased. Last week, Offerpad Solutions reported first-quarter revenue of $80.1 million, down 50% year-over-year, with total real estate transactions falling 49% to 263. However, Offerpad projected sequential gains in adjusted EBITDA. Opendoor continues to leverage partnerships with major real estate websites like Zillow and Redfin as key distribution channels.
Outlook
Opendoor aims to achieve adjusted net income profitability on a rolling 12-month basis by the end of 2026. The second quarter will be a crucial test, as the company must demonstrate that its operational improvements can translate into sustainable financial performance. With volume and cost pressures still present, shareholders are watching closely to see if faster sales can offset shrinking volumes and stubbornly high costs.
