Opendoor Stock Plunge: Earnings Weakness and What's Next

Title: Opendoor's Q3: Meme Stock or Value Play? A Data Dive

Opendoor (OPEN) just dropped its Q3 2025 earnings, and the market’s reacting like it’s seen a ghost. Shares dipped after hours despite the company technically beating revenue expectations ($915 million versus an estimated $849.6 million). But let's be real, that EPS miss of -$0.12 (analysts wanted -$0.08) is the kind of thing that spooks investors, especially with a meme stock pedigree.

The IBuying Rollercoaster

The core issue? Opendoor's still struggling to turn a profit in a high-interest rate environment. Home sales are down – 2,568 this quarter compared to 3,620 last year. Gross profit took a hit too, falling from $105 million to $66 million. The gross margin also shrunk slightly, from 7.6% to 7.2%. These numbers paint a clear picture: fewer homes sold, less profit per home, and a tighter squeeze overall.

Now, the company's touting its inventory reduction, which is down 51% year-over-year, sitting at 3,139 homes valued at $1.053 billion. That sounds great on the surface – shedding assets, freeing up capital. But buying activity is also way down. Opendoor only purchased 1,169 homes this quarter, a significant drop from the 3,500 they bought in Q3 2024. What does that tell us? They're playing defense, hunkering down, and trying to weather the storm.

And here’s where it gets interesting. Management's Q4 guidance forecasts revenue around $595 million (above the $545.1 million estimate), but the adjusted EBITDA loss is projected to be in the high $40 million to mid $50 million range. That EBITDA guidance is worse than anticipated (previous estimates were around a $41.2 million loss). In other words, they expect to lose even more money despite selling more houses than anticipated. It's like trying to fill a leaky bucket faster – you might have more water flowing in, but you're still losing water overall.

The Meme Stock Paradox

Opendoor's stock has been a wild ride, fueled by retail investors and meme stock mania. It's up 292% over the past 52 weeks and a staggering 899% over the last six months. But, as always, past performance is not indicative of future results. The stock is down 36% from its 52-week high of $10.87 in September. And this is the part of the report that I find genuinely puzzling. Despite this surge, the price-to-sales ratio is 1.02, lower than the industry average of 4.36. So, is it a bargain find, or a value trap?

Wall Street analysts are leaning towards the latter, with a "Moderate Sell" consensus based on one Buy, one Hold, and three Sell ratings. The average price target of $2.18 implies a massive 67.6% downside risk. (Though, to be fair, those estimates will likely be revised after this earnings report.)

Opendoor's attempt to engage with shareholders via a livestream on Robinhood is a clear play for the meme stock crowd. They want to keep the hype alive, hoping that retail investors will continue to prop up the stock despite the shaky financials. It's a high-stakes gamble. Can they convince enough people that the long-term potential outweighs the short-term losses? Dear Opendoor Stock Fans, Mark Your Calendars for November 6.

A Triumph of Hope Over Data?

The company is trying to project confidence. But the numbers tell a different story. While Opendoor is streamlining operations and reducing inventory, it's also cutting back on home purchases. The meme stock surge has given them a temporary reprieve, but the underlying business model is still unproven in a rising-rate environment. Unless they can drastically improve their margins, this rally feels more like a sugar rush than a sustainable trend.