Opendoor: One Reason to Hold And One Reason to Avoid
Despite suffering heavily due to the pandemic, the real estate industry was one of the quickest to pick back up. It has gone through a prolonged period of falling and stabilizing and then falling again, but the property prices are expected to start rising soon. Opendoor Technologies (NASDAQ:OPEN) works around the housing market and it hasn’t had a good start to 2022. The company is trying to change the way people buy and sell homes. Despite having an early mover advantage, Opendoor hasn’t been able to push OPEN stock higher.
The stock was trading close to $32 in February of 2021 and hasn’t been able to hit the thirties in the last 12 months. It is down 70% in a year and 42% in the past six months. The stock went as low as $8.50 in January this year and is trading just above $10 today.
Everything is not well with the real estate sector and it will certainly impact OPEN stock. But here is one reason to hold and one reason to avoid the stock.
The iBuying Model Is a Hit
Technology has changed the way we live. Whether it is buying groceries, booking a holiday, or selling your home, everything can be managed from the couch and this approach is here to stay. Millennials love the ease of the internet and it is only going to penetrate further into our lives.
Opendoor offers just that. It makes the process of house selling quick and easy, just what we are looking for.
The iBuying model is a huge hit and it could become one of the biggest trends of 2022. You do not need to put your house on the market and wait for weeks and months to get a buyer. There is no need to arrange showings and go through the long and stressful procedure. With Opendoor, you can sell your home as fast as possible.
I believe the company has a business model and structure that works and is one that will continue to rule in the coming years. The decline in OPEN stock is due to external market-related factors and the overall economic sentiment. If there is only one reason to bet on the company, it is their iBuying business model, which is still in the infancy stage.
The Housing Market Is Uncertain
One cannot deny the fact that there are uncertainties surrounding the real estate sector and the interest rates. This is affecting OPEN stock adversely. On top of that, professionals may have to return to offices this year and there will be a rise in the demand for homes. Unfortunately, the time of this return cannot be estimated.
The company could also face stiff competition in the industry. iBuying will be in, but it will also be affected by private companies buying properties to rent out.
The industry is going through a huge transition. If Opendoor can handle the uncertainties well, it will be able to make the most of its advantages.
The Bottom Line on OPEN Stock
Opendoor has a lot working in its favor, from its successful business model to the massive market it can cater to. However, several external factors will continue to have an impact on its business and revenue numbers. These factors are out of its control and Opendoor will have to adapt to the changes and trends in the real estate industry.
If you are keen on adding the stock to your portfolio, this is the perfect time to take a position as the stock is close to a 52-week low. However, you will need a lot of patience to enjoy returns on the stock. The company will report its fourth-quarter results on Feb. 24.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long-term gains. Her knowledge of words and numbers helps her write clear stock analysis.
