Opendoor Technologies' (NASDAQ: OPEN) misfortunes continue to deepen as the real estate market remains stuck, with no light showing yet at the end of the tunnel. It's joined the ranks of penny stocks and keeps sliding, down 56% this year alone and trading at dangerously low levels at under $1 per share.
Is there any hope left for Opendoor, or should investors stay far away?
Gloom and doom
Opendoor is an iBuyer, which means it buys homes directly from sellers, fixes them up, and then sells them at a higher price. It's a simple business model that individuals have been using forever, and Opendoor takes it up a notch by scaling it into a full, digitally supported platform. It also offers an assortment of complementary services, such as an online marketplace and agent services, and it's always expanding its features to meet demand and create options for sellers and buyers.
When the company went public in 2020, interest rates were historically low, and real estate was booming. The company's strong performance has now been hampered by high interest rates and a housing market that isn't budging.
According to the latest market data, housing prices are still rising, and the median home price reached $430,838 in March. Homes sold declined by 2.7%, and the average 30-year fixed mortgage rate declined by 0.17%, but was still high at 6.7%. Homes are also selling at their slowest pace in six years, with the average home on the market for 47 days before going under contract.
Image source: Getty Images.
Opendoor's management is tweaking its model to get the best it can out of the current circumstances. Instead of relying on its core product of making cash offers to home sellers, it's expanding its agent network with a program for agents to connect with potential homebuyers and explain the options.
It's also shifting its marketing and ad spend to find more homes for sales in the off-season, which are prepared for resale in the high season. A company as large as Opendoor believes it has the leverage to do that successfully.
Don't be fooled by earnings beats
Opendoor released its latest update this week, and although I would call it mixed, the market responded positively. Results were better than expected, and management gave a pleasing outlook.
Sales were down 2% from last year in the 2025 first quarter, but they beat Wall Street's expectations, and houses sold were down 4%. Gross profit was $99 million, down from $115 million last year, and gross margin was 8.6%, down from 9.7% last year. Net loss improved from $109 million in 2024 to $85 million in 2025, and loss per share was also better than Wall Street was looking for.
In some forward-looking metrics, it purchased 3,609 homes, 22% more than last year, but it ended the quarter with 1,051 homes under contract -- 60% lower than last year.
Beating expectations is certainly a step in the right direction, but there isn't enough progress to say Opendoor is out of the woods. A business turnaround will require a much stronger housing market, and the company doesn't have control over that. Management's work with what it does have control over is confidence-boosting, but the company will remain in a challenging position until external forces change.
The trek back up may be too long
Opendoor's platform might be better than the traditional system, but it's not good enough to beat back current headwinds. As those headwinds remain strong, Opendoor can't bounce back. At the current price, Opendoor stock trades at a price-to-sales ratio of less than 0.1, but it's not a bargain if you don't expect the stock to move higher anytime soon.
I wouldn't say there's no hope for Opendoor, but there doesn't look like any reason for investors to tie up money in this stock while the environment remains unfavorable. There are better places to park your money right now, or you might enjoy that slice of pizza.
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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
