Opendoor Must Adapt Its Business Model To Improve Flexibility – Or Continue Value Freefall


  • Despite favorable fundamentals for value investors, Opendoor’s business model is reliant on razor-thin operating margins, leaving the company susceptible to unfavorable macroeconomic conditions.
  • COGS that are directly proportional to revenues make scaling such a business very difficult.
  • Several valuation metrics hint at a risk of bankruptcy barring a reduction in federal interest rates.
  • Despite the inherent flaws in the business model, Opendoor’s resources and dominant market share provide an opportunity to potentially pivot, e.g., offering rentals to provide a steady cash flow.

Female real estate agent carrying document while walking into house

The Good Brigade


A traditional home transaction typically involves a long, drawn-out process that includes finding an agent, marketing the property, staging open houses, receiving and negotiating offers, and repeating a similar process to purchase a new home. In a time when technology is king

Examples of Opendoor business


iBuyer Market Share - Total


IBuying profitablity


Latest 10-K and 10-Q filings for Opendoor, Redfin, and Offerpad

Latest 10-K and 10-Q filings for Opendoor, Redfin, and Offerpad

Opendoor's latest 10-Q filing

Opendoor’s latest 10-Q filing

Stock chart


Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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