Opendoor Technologies Inc. (OPEN) saw its stock decline by 1.07% to close at $1.85 on November 8, 2024, amid a challenging housing market backdrop. The stock opened at $1.93 and reached a high of $2.02 before retreating to a low of $1.73, with trading volume surging to 58,216,801 shares, significantly above the average. Despite reporting strong Q3 2024 results with a 40.5% y/y revenue increase to $1.377 billion and adjusted EBITDA of $(38.0) million, the market reacted negatively to the company's cautious outlook for Q4. Citi maintained a "Neutral/High Risk" rating, citing persistent housing market challenges, including the lowest level of existing home sales since 1995 and high interest rates, which overshadowed the positive earnings surprise.
Opendoor's strategic measures, such as a 17% workforce reduction and a focus on capital-light solutions, aim to navigate the tough market conditions. However, inventory issues persist, with 23% of homes on the market for over 120 days, and management anticipates further deterioration in Q4. The company has raised spreads to manage risk, impacting acquisition levels and margins, with Q4 contribution margins expected between 1.6%-2.6%. Despite these efforts, the market remains skeptical, as reflected in the stock's performance.