Key takeaways from Opendoor’s Q3 earnings call
A lot was said, and none of it gave the stock a boost.
Opendoor Technologies reported Q3 earnings that were not well received by the market, with shares cratering in after-hours trading on Thursday and continuing to be mired deep in the red on Friday.
“Deep in the red” also describes its income statement in Q3 and the outlook for Q4: adjusted EBITDA of -$33 million was well below the Street’s estimate for -$23.7 million as well as Opendoor’s previous guidance. In Q4, that’s poised to swell to “the high $40 millions to mid $50 millions,” per management.
Here are our top takeaways from the Q3 earnings call that followed the release of these results:
The operational strategy is to buy more homes, faster, and flip them for a small profit with haste.
CEO Kaz Nejatian said the weekly number of homes the company entered into contracts to buy went from 120 on his first day of work to 230 by the end of October.
“Our business plan is simple: buy and sell lots and lots of homes quickly, be operationally excellent, and increase our value to each homeowner by launching services like mortgage, insurance, and warranty,” he said.
There’s low-hanging fruit on expenses to cut:
Nejatian said he was “shocked” to learn that one of Opendoor’s biggest 1H expenses were payments to a well-known consulting firm.
Per Chairman Keith Rabois and EMJ Capital’s Eric Jackson, Opendoor had about 1,400 employees when Nejatian joined the company. The CEO said that number is now down to 1,100.
The majority of its 2030 convertible notes were refinanced with equity.
“Earlier today, we reached an agreement to retire the majority of these notes,” Nejatian said, adding that this avoids a situation where the company could have been forced to repay these in full before the end of 2025.
Real estate tokenization is certainly in the cards, timeline TBD:
“I don’t want to say we’re going to do this next week, but I generally can’t imagine a future where real estate is not tokenized. And I also can’t imagine a future where Opendoor isn’t leading innovation in real estate,” Nejatian said. “We’ve begun talking with partners about how we can work across stablecoins and tokenization. The work is active. We’re very serious about it, and we’ll tell you more when we launch something.”
Perhaps most importantly (and discouragingly, for Opendoor bulls), nothing that was said during this call was considered to be a meaningfully positive catalyst by markets:
Shares ended the conference call a little lower than where they were when it kicked off.
