Opendoor Stock: It’s Time to Consider This Undervalued Gem!
September 16 2021 - 6:20AM
Finscreener.org
While most equity indices are
trading close to record highs, there is one growth stock that is
flying under the radar. Opendoor Technologies (NASDAQ:
DOOR) stock went public in June 2020 and has since
gained 55% in market value. However, it’s also down 50% from
all-time highs making it
a top buy for your growth
portfolio right
now.
An overview of Opendoor stock
Opendoor is a digital platform
for residential real estate. The company was founded in 2014 and
aimed to reinvest one of the most important transactions of an
individual’s life which is the purchase or sale of a home. It has
built the entire consumer real estate experience, making buying and
selling possible on a mobile device. Opendoor currently operates in
several cities in the U.S. and is headquartered in San
Francisco.
Opendoor is focused on
transforming and simplifying the home buying process which is
complex, uncertain, and time-consuming. It has built scalable
pricing capabilities, leveraged technology to centralize
operations, and provides customers with a suite of digital-first
consumer products. These investments have allowed the company to
complete over 100,000 transactions and expand its footprints in 41
markets across the U.S.
This company basically provides
homeowners that intend to sell their house with cash offers while
helping stakeholders navigate the closing process digitally. While
a real estate agent generally charges a 6% commission, Opendoor’s
fee stands at 5% lowering homeownership costs.
Opendoor reports strong Q2 results
In the second quarter of 2021,
Opendoor acquired a record 8,494 homes and generated $1.2 billion
in sales. It also reported an adjusted EBITDA of $25.6 million. The
number of homes acquired rose 136% on a sequential basis while
revenue soared 59% compared to Q1 of 2021.
The company’s gross profit grew
64% to $159 million, indicating a margin of 13.4%. Its adjusted net
income stood at $2.5 million compared to a loss of $21 million in
Q1 of 2021.
Opendoor ended Q2 with an
inventory balance of 7,971 homes that represent $2.7 billion in
value. Its inventory balance more than tripled compared to Q1 of
2021.
The company explained its
business continued to gain momentum in Q2 as offers more than
doubled sequentially and real seller conversion stood at record
levels. In its shareholder letter, Opendoor stated, “This momentum
continues to demonstrate the strong demand for our product
experience as consumers gravitate towards more seamless,
digital-first solutions. Q2’s acquisition volume was in part driven
by the 15% increase in our buybox coverage versus last
quarter.”
Opendoor is able to underwrite an
additional 15% of its homes in existing markets. Its dynamic
pricing platform ingests new data to improve accuracy and expand
the breadth of the price points and home types. This in turn allows
the company to expand the flywheel by driving brand awareness and
increasing customer adoption as well as market
efficiency.
What next for OPEN stock?
Analysts tracking OPEN stock
expect its sales to rise by 157% year over year to $6.65 billion in
2021 and by 80.8% to $12 billion in 2022. This will allow the
company to narrow its loss from $2.62 per share in 2020 to $0.87
per share in 2022.
We can see that OPEN stock is
valued at a forward price to 2022 sales multiple of 1.2x which is
extremely cheap considering its growth rates.
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