Quotes of Opendoor Technologies, which runs a platform for residential real estate in the U.S., soared nearly 43% yesterday, July 21, and are up more than 256% over the last five trading sessions. The stock has found a sudden fandom among retail traders and social-media platforms, writes Bloomberg, and is "classic" example of a meme stock, says Barron's. 

Details

Opendoor stock jumped nearly 43% to $3.21 per share yesterday. It rose as high as $4.97 per share, a 121% premium to the last closing price on Friday, July 18.

Shortly after 15:00 New York time, almost 26 million shares changed hands in a minute before trading was halted, reports Bloomberg. Stocktwits named Opendoor the most actively traded stock of the day.   

Yesterday marked the sixth day in a row of gains for Opendoor, which has risen more than 312% in this period. In premarket trading this morning, the stock has added another 15% as of this writing. 

Context

Opendoor attracted investor attention after Eric Jackson, founder of Canadian hedge fund EMJ Capital, made a series of posts on X encouraging buying, saying "We believe it could be a 100-bagger over the next few years."

“Individual investors are partying like it’s 1999,” Matt Maley, chief strategist at Miller Tabak + Co., told Bloomberg. He compared the rally to GameStop in 2021, when retail traders rallied on platforms like Reddit to buy small, volatile names, creating the first meme stocks.

Opendoor is a "classic" example of a meme stock, writes Barron's. 

Outlook

“Volatility giveth and volatility taketh away,” Kim Forrest, chief investment officer at Bokeh Capital Partners, told Bloomberg. She noted that meme-stock rallies always fade because they are not driven by fundamentals. For example, GameStop has plunged 70% to trade at $24.20 per share currently from its peak of $81.25 per share on January 25, 2021.

Opendoor's stock has soared even though there has been no fundamental change in the underlying business, the Motley Fool confirms. The publication recalls that shares jumped during the pandemic-era real estate boom. At that time, homeowners were able to buy houses and refinance mortgages at low rates, but now that rates are high, they are reluctant to sell. As a result, Opendoor quotes are off 90% since the peak in 2021.

Some social media users have started talking about how Opendoor could be the next Carvana, writes the Motley Fool. The online used car retailer, back in 2022, was on the verge of bankruptcy but managed to achieve a turnaround. However, the Motley Fool considers the comparison inappropriate. "Opendoor has plunged not because of a bankruptcy threat, but because its business model seems fundamentally flawed to Wall Street," it writes, adding that "No one has successfully done home-flipping at scale before." It believes that without significant changes in the housing market, "A similar recovery for Opendoor still seem distant if not impossible." "While the meme stock rally can drive Opendoor shares, the long-term outlook for the business remains troubling," the Motley Fool concludes. 

Barron's also writes about a "bleak" outlook: The real estate market has gone stagnant, existing-home sales have fallen nearly 50% since Opendoor went public in late 2020, and the company has reported an adjusted loss for 11 straight quarters. The consensus target price on FactSet is just $0.93 per share.

Only one Wall Street analyst out of the nine covering the stock rates it a "buy," according to MarketWatch. There are six "hold" recommendations and two "sells." 

The AI translation of this story was reviewed by a human editor.

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