Opendoor Technologies Inc. (NASDAQ:OPEN) experienced a significant surge in its stock price, rising 27% over two trading sessions, driven by exceptionally high trading volume. The activity has put the spotlight on the company's upcoming second-quarter earnings report, scheduled for release after the market closes on August 4.
On Wednesday and Thursday, investors exchanged approximately 259.5 million shares of Opendoor, representing 26.9% of the company's outstanding shares as of the end of March. Despite the massive turnover, the stock price only rose 0.4% over the two-day period, indicating intense debate among market participants about the company's prospects.
Shares ended Thursday at $4.57, a decline of 3.8% from the previous close, with 144.1 million shares traded. The volume on Thursday alone was 2.8 times higher than the stock's 65-day average. Combined volume was also 1.4 times higher than the short position reported on June 30, suggesting unusually active positioning, though it does not confirm short covering.
The housing market continues to face headwinds, with the average 30-year mortgage rate rising to 6.55% from 6.49% the previous week. Homebuilder sentiment dropped to 34 in July, marking its 15th consecutive month below 40. “Many potential buyers remain on the sidelines,” said Bill Owens, chairman of the National Association of Home Builders.
Opendoor’s management has forecast approximately 25% sequential revenue growth from the first quarter, with a contribution margin target of about 6%. Adjusted EBITDA is projected to be close to breakeven. Preliminary calculations suggest second-quarter revenue of around $900 million, which would translate to roughly $54 million in contribution profit at a 6% margin.
First-quarter results showed both progress and challenges. Gross margin improved to 10.0% from 8.6% in the prior year, but revenue dropped 38% to $720 million, and net loss widened to $173 million from $85 million. Inventory levels fell to $1.14 billion from $2.36 billion a year earlier, while cash stood at $999 million and non-recourse debt remained near $1.14 billion.
Chief Executive Kaz Nejatian outlined the company’s operational strategy in May: “Better acquisitions, faster turns, stronger margins. The machine is working.” The upcoming earnings report will need to provide data to support that assertion.
Risks remain significant. Higher mortgage rates could reduce resale speed and lead to deeper price reductions. Shifts in inventory levels might offset margin improvements, and high short interest could increase volatility. The company has noted it cannot provide an exact reconciliation between its non-GAAP and GAAP outlooks due to uncertainties in valuation items.
Investors can submit questions between July 22 and July 29, with the earnings report due after the market closes on August 4. Trading is likely to remain volatile in the interim, with execution remaining the key issue for Opendoor.
