Opendoor Technologies Finds a New CEO. Is It a Game Changer?

Key Points

• Opendoor hired Shopify COO Kaz Nejatian as its new CEO, sending the stock soaring.

• Nejatian brings helpful experience with AI and scaling up Shopify's platform.

• While investors welcomed the news, Opendoor's business model still seems unproven.

• 10 stocks we like better than Opendoor Technologies ›

Opendoor Technologies (NASDAQ: OPEN) bulls are stampeding again. Less than three months after the stock started soaring on a meme stock rally that began with an argument that the company could be the next Carvana, Opendoor is now making some real changes, and investors are delighted.

About a month after CEO Carrie Wheeler stepped down, the company -- which buys and sells residential real estate online -- has overhauled its leadership team, and it just tapped Kaz Nejatian to be its new CEO. Nejatian was the COO of Shopify, one of the best-regarded tech commerce platforms, and before that the founder of a payment technology company, Kash, which was sold in 2017.

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Opendoor also brought back co-founders Keith Rabois and Eric Wu to serve on the board of directors, with Rabois taking over as chairman. In a press release, Opendoor said that bringing Rabois and Wu back would inject "founder DNA" back into the company.

Image source: Getty Images.

What the leadership change means for Opendoor

Nejatian seems like a good choice to fill the CEO role. After all, Shopify has been a leader in e-commerce software for more than a decade, and he helped roll out some of the company's new AI tools. AI is a key focus of Opendoor as it attempts to revamp its product and its business, so Nejatian's experience should be valuable.

In a post on X, Nejatian talked about the importance of making home ownership easier, and he hopes to do for homebuyers and sellers what Shopify did for entrepreneurs: make a platform that meets their needs and scale it up. He added, "This is a once-in-a-lifetime opportunity to redefine what's possible in real estate."

Additionally, it looks like a positive to have the co-founders back in the fold. It's worth noting, though, that Opendoor has never been profitable, even when the founders were running the business.

As of late trading on Thursday afternoon, Opendoor stock was up a whopping 80%, an unusually large one-day pop for any stock, especially on news of a leadership change. By comparison, one of the biggest one-day jumps on a new CEO in recent memory came when Starbucks poached Chipotle Mexican Grill CEO Brian Niccol to be its new CEO, sending the stock up 24% in one session. Roughly a year later, Starbucks has fallen from that pop.

Will the leadership change also change the game?

Opendoor isn't Starbucks, of course, and Opendoor's platform and brand have more flexibility than a Starbucks store, but it's worth keeping in mind that turnarounds involve more than just bringing in a new leader. As Warren Buffett once said, "When a manager with a reputation for brilliance tackles a business with a reputation for bad economics, it's the reputation of the business that remains intact."

Opendoor primarily makes money from reselling the homes it purchases, though it also collects fees for related services. It's essentially a middleman in the homebuying equation. In order to make money flipping homes, you need to either add value through home renovations or absorb part of the gain that would have gone to the seller. Opendoor doesn't do renovations. It aims to earn a profit by making the transaction process more convenient.

Nejatian deserves some time to put his imprint on the business and turn things around. He should get some help from interest rate cuts from the Federal Reserve, which are expected to begin next week. Still, considering that both Zillow and Redfin bowed out of the iBuying game, the odds still seem stacked against Opendoor and the iBuying business model.

Keep your eye on what changes Nejarian makes and on how the housing market behaves over the next year. With enough tailwinds from the housing market, Opendoor could turn profitable, but building a sustainable business model in this industry still looks difficult.

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Jeremy Bowman has positions in Carvana, Chipotle Mexican Grill, Shopify, and Starbucks. The Motley Fool has positions in and recommends Chipotle Mexican Grill, Shopify, Starbucks, and Zillow Group. The Motley Fool recommends the following options: short September 2025 $60 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.