Opendoor's "Re-Founding": More Like Rearranging Deck Chairs on the Titanic?
The Numbers Don't Lie (Usually)
Opendoor (OPEN) is talking about a "re-founding." Bold words. Kaz Nejatian, the new CEO, wants you to think they're building something new. But let's look at the Q3 numbers they just dropped. The stock's reaction – down 16% after hours – speaks volumes. It's not a rebirth; it's a scramble.
Earnings per share missed estimates, coming in at negative $0.12 against an expected negative $0.08. Sales dropped from $1.38 billion to $915 million. That’s a big miss, no matter how you slice it. Sure, they beat revenue estimates of $849.6 million, but that's like celebrating a slightly less painful root canal. The core problem is still there.
They sold fewer homes: 2,568 compared to 3,620 in the same quarter last year. Gross profit took a hit, too, falling from $105 million to $66 million. Their gross margin is also down slightly, from 7.6% to 7.2%. It’s not a cliff-dive, but it’s trending in the wrong direction. The inventory is down 51% year-over-year, which they'll spin as efficiency, but it also means they're buying far fewer houses. (Only 1,169 this quarter versus 3,500 last year, to be precise). Less inventory generally implies lower sales volume in the future.
And this is the part of the report that I find genuinely puzzling. Opendoor highlights strategic shifts: agent partnerships, in-house financing, and "Cash Plus." These are presented as growth levers, but the numbers suggest they're not moving the needle yet. These initiatives are projected to show results in 2026 and beyond, so how much of this "re-founding" is just a PR exercise to distract from the current weakness?
Guidance: A Glimmer of Hope or a Mirage?
Their Q4 2025 guidance isn't exactly confidence-inspiring. They're projecting revenue of around $595 million, which does beat the $545.1 million estimate. However, the adjusted EBITDA loss is expected to be in the high $40 million to mid $50 million range – worse than the estimated $41.2 million loss. This is likely the reason the stock tanked after hours. The market sees through these kinds of carefully worded projections. As reported by Seeking Alpha, Opendoor stock sinks after Q3 earnings miss; transformation plan unveiled (OPEN:NASDAQ).
Now, let’s talk about analyst ratings. The consensus is "Moderate Sell," with an average price target of $2.18, implying almost 70% downside risk. (Though, as the report itself notes, those estimates are likely to change after this earnings call.) Still, it's a bleak outlook. The options market seems to agree, pricing in a potential 15% move in either direction post-earnings. That's a high level of uncertainty.
Here's my thought leap: How reliable are these analyst ratings, anyway? They're based on backward-looking data and subjective interpretations of management's guidance. Are analysts accurately capturing the nuances of Opendoor's "re-founding," or are they simply extrapolating from past performance? It's impossible to say for sure, but I'd take those ratings with a grain of salt. They're a data point, not a prophecy.
Opendoor emphasizes its shift toward a broader platform, including agent partnerships. This is a smart move, theoretically. But it also raises questions. Are they becoming just another brokerage with extra steps? The beauty of the original "iBuyer" model was its simplicity and speed. Adding layers of complexity could dilute their value proposition. It's like adding extra ingredients to a perfectly good cocktail; you risk ruining the flavor.
Show Me the Money (and the Houses)
The core issue, as I see it, is whether Opendoor can navigate the current housing market without bleeding cash. High mortgage rates and weak demand are a toxic combination. Their "re-founding" sounds a lot like a survival strategy dressed up as innovation. And survival is not guaranteed. Opendoor might be able to pull a rabbit out of a hat, but the data suggests they're facing a very tough climb.
