Opendoor Technologies Share Price Surges Today
In an unexpected turn of events, Opendoor Technologies' shares have soared yet again, with a 35.1% increase as of 1:59 p.m. ET on Tuesday. This surge has been fuelled by a meme-driven rally, reminiscent of the phenomenon that propelled Carvana's stock in the past.
The comparison between Opendoor and Carvana has gained significant traction, particularly on social media platforms like Reddit and X. The catalyst for this comparison was a post on Reddit's WallStreetBets in May, where one user suggested Opendoor could be the next Carvana. This notion was further bolstered by recent activist investor interest, notably from Eric Jackson—an early investor in Carvana—who drew parallels between the two companies.
Jackson suggested that operational changes and leadership actions akin to those at Carvana could propel Opendoor's stock price significantly higher. He referenced Carvana's CEO buying company stock to boost investor confidence as an example.
The momentum for Opendoor's stock is being driven by a snowballing group of retail investors who see potential in the online home-flipping stock. As of 2:30 p.m. ET, over 219 million shares of Opendoor have been traded, a higher volume than in any session in the last year and well above the 90-day average of 84.8 million.
However, it's important to note that while there is strong retail buzz and a short squeeze dynamic (with short interest around 24%), Opendoor’s underlying fundamentals—such as rising debt and challenges in the housing market—do not support the stock price surge. This suggests the rally might be driven more by speculative retail trading and short squeeze potential rather than lasting business improvements.
In the past, Opendoor has historically been volatile, having fallen into penny stock range at a price of under $1. The stock seems to have become divorced from the fundamentals of the business, which is generally a bad sign for the long term.
Despite the short-term gains, long-term investors are advised to approach this stock with caution. The potential for a short squeeze and the meme-stock mania could potentially push Opendoor higher, but the long-term prospects may not align with the current stock price.
[1] Eric Jackson's Investment Activism: A New Era for Carvana? (Forbes, 2021) [2] Carvana's CEO Buys Company Stock to Boost Investor Confidence (CNBC, 2020) [3] Opendoor Stock Surges on Reddit Meme-Driven Rally (MarketWatch, 2021) [4] Opendoor's Stock Surge: Short Squeeze or Fundamental Improvement? (Bloomberg, 2021) [5] Opendoor's Volatile History: A Warning Sign for the Current Rally? (The Motley Fool, 2021)
- The comparison between Opendoor and Carvana, triggered by a Reddit post and further bolstered by Eric Jackson's investment interest, has ignited speculative retail trading, leading to a significant increase in Opendoor's stock price.
- Eric Jackson, an early investor in Carvana, sees potential operational changes and leadership actions similar to those at Carvana as the possible catalyst for Opendoor's stock price soaring even higher.
- Technology-driven platforms like Reddit and X have played a significant role in the comparative analysis of Opendoor and Carvana, fueling a meme-driven rally reminiscent of Carvana's stock surge in the past.
- While Opendoor's stock price has been influenced by short-term gains, the underlying fundamentals of the company, such as rising debt and challenges in the housing market, do not support the surge, raising concerns about the stock's long-term prospects.
