Shares of Opendoor Technologies (NASDAQ: OPEN) moved higher Thursday afternoon, outperforming the broader market as investors weighed the company's turnaround efforts against fresh signs of weakness in the U.S. housing sector. The stock rose approximately 4.3% to $4.59, trading between $4.26 and $4.63 on volume of nearly 28 million shares. The company's market capitalization now stands at roughly $4.4 billion.
Opendoor, which uses technology to purchase homes directly from sellers and then resell them, faces pressure to demonstrate that its iBuying model can remain viable even as the housing market slows and borrowing costs climb. While headline net losses remain sizable, market participants are focusing on operational metrics such as home-flip speed, inventory levels, and progress toward adjusted EBITDA profitability.
Mortgage rates continue to weigh on the housing market. Freddie Mac reported that the average 30-year fixed-rate mortgage rose to 6.51% on May 21, up from 6.36% the prior week. The 15-year fixed-rate mortgage increased to 5.85%. These higher rates are dampening homebuyer demand and pressuring homebuilder activity.
Data from the U.S. Census Bureau released Thursday showed that single-family housing starts fell 9.0% in April to a seasonally adjusted annual rate of 930,000 units. Permits for single-family homes also declined, dropping 2.6%. Analysts at Reuters attributed the pullback to elevated mortgage rates, rising inventories, and construction cost pressures.
Opendoor's first-quarter results, reported earlier this month, provided some encouragement for bullish investors. Revenue came in at $720 million, down from $1.15 billion a year earlier. The company posted a net loss of $173 million. However, CEO Kaz Nejatian highlighted that Opendoor achieved adjusted EBITDA profitability on a 12-month forward basis as of April 1. He also noted that acquisition contracts doubled from the previous quarter.
Nejatian described the quarter as a “step-function change” in margins, resale speed, and inventory health. “The machine is working,” he told investors, repeating a phrase that has gained traction among analysts. The company reported that only 10% of its listed homes had been on the market for more than 120 days at the end of Q1, a sharp improvement from 33% at the end of Q4.
Broader housing data presented a mixed picture. Pending home sales rose 1.4% in April, exceeding economists’ expectations. However, Nancy Vanden Houten of Oxford Economics cautioned that home sales could remain constrained through the rest of the year due to high mortgage rates, economic uncertainty, and elevated gasoline prices.
Other housing-related stocks showed modest gains. Zillow Group’s Class C shares edged up, and Offerpad, a smaller iBuying competitor, also rose. The SPDR S&P Homebuilders ETF (NYSEARCA: XHB) was up about 0.9%, indicating that the move in Opendoor was not part of a broad selloff in housing names.
Investors appear to be pricing in potential operating improvements at Opendoor before the housing cycle turns. However, the company continues to lose money on a net basis, and its business remains closely tied to mortgage rates, home prices, financing costs, and its ability to flip homes quickly. If rates stay elevated or buyer demand falters, Opendoor could face thinner margins or an increase in holding periods, which would challenge the turnaround narrative that has driven the stock higher.
