Is Opendoor Technologies Stock's Pullback a Buying Opportunity?

Key Points

• Opendoor's Monday slide and after-hours drop came alongside a broad crypto sell-off and fading meme enthusiasm.

• Recent results showed a return to positive adjusted EBITDA, but guidance implies a step back in the current quarter.

• The new CEO's hefty, price-hurdle equity package highlights the upside the board is chasing -- while reminding investors how uncertain the path remains.

• 10 stocks we like better than Opendoor Technologies ›

Opendoor Technologies (NASDAQ: OPEN), the online home-buying and selling platform, saw its shares swing sharply again this week. After a strong run in recent months, the stock declined on Monday and continued to fall after hours. Broader risk-off sentiment, including a sharp sell-off in cryptocurrencies and the unwinding of leveraged bets, weighed on the stock. The recent pullback raises an important question for investors: Is this a buying opportunity, or does it signal the need for caution?

Opendoor's business model is straightforward: Use data to make instant cash offers, renovate homes, and resell them to earn a spread and related fees. While this approach can work in stable housing markets, the current environment remains slow and sensitive to interest rates. With the stock experiencing significant volatility, the key question is whether Opendoor can deliver consistent value creation over time, rather than simply timing a rebound.

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Image source: Getty Images.

Recent performance and what management said

Opendoor's latest quarterly update offered both progress and context. In the second quarter, Opendoor Technologies generated $1.6 billion in revenue, up slightly year over year and up meaningfully from the prior quarter. Gross profit was $128 million, and the company posted $23 million of adjusted EBITDA, while shrinking its net loss to $29 million. Regarding some of Opendoor's most important business metrics, the company sold 4,299 homes, purchased 1,757, and reduced inventory to $1.5 billion, or 4,538 homes, versus a year earlier.

In the company's Q2 earnings release, then-CEO Carrie Wheeler noted that the team "achieved our first quarter of Adjusted EBITDA profitability since 2022" despite a deteriorating housing backdrop and emphasized expanding an "agent-led distribution platform" to reach more sellers with lower-capital, partner-driven offerings.

These results help explain the optimism that has driven the stock higher. Opendoor is showing signs of improved unit economics, tighter inventory management, and the ability to operate more efficiently while expanding its reach through partner agents.

However, the same report highlighted ongoing challenges. Contribution margin declined to 4.4% from 6.3% a year ago, home acquisitions fell significantly, and the inventory still includes older homes, which could pressure spreads if market conditions change. Management's guidance for the third quarter calls for lower revenue and a return to negative adjusted EBITDA, reflecting the effect of lower volumes and tighter spreads.

A timely leadership update -- and what it signals

There's also a leadership and incentives angle that investors should weigh carefully. Last week, Opendoor announced inducement equity grants for newly appointed CEO Kaz Nejatian. The package includes a make-whole grant of about 1.58 million RSUs and two separate performance-based PSU awards of roughly 40.9 million shares each.

These vest only upon meeting stringent time and share-price hurdles starting at an average 60-day price of $6.24 and stair-stepping through targets as high as $33, with five-year performance windows and change-in-control protections structured at higher prices. This is classic "pay for performance." If the stock sustains dramatically higher prices over time, Nejatian wins big; if not, most of the grant won't vest.

For investors, the new CEO's equity package signals the board's focus on driving upside through improved execution, a shift toward more capital-light revenue, and tighter operations. At the same time, the ambitious targets and structure of the awards highlight the many factors that still need to align -- such as resale spreads, acquisition pace, and successful partnerships -- to reach those price goals.

Valuation, volatility, and Monday's sell-off

The near-term tape reinforces the risk. Monday's slide came as speculative assets wobbled. Bitcoin and other major tokens fell sharply, and more than $1.5 billion of leveraged crypto longs were liquidated, draining risk appetite across corners of the market where Opendoor has recently traded like a meme favorite. Shares extended losses after hours, with commonly referenced feeds showing the stock down further from the close.

This recent volatility serves as a reminder that Opendoor is not yet a steady compounder. Despite the pullback, the stock's year-to-date gains remain significant and largely driven by sentiment. Management's guidance points to lower revenue and a return to negative adjusted EBITDA this quarter as the housing market stays soft. If spreads narrow or resale timelines extend, even small changes could have a meaningful effect on results. Despite these concerns, the company boasts a market capitalization of more than $6 billion as of this writing -- a valuation that prices in outstanding execution for years to come.

New leadership, an expanding agent-led channel, and a focus on leaner operations could help Opendoor become a stronger, less capital-intensive business over time. Additionally, the positive adjusted EBITDA in Q2 shows that the model can work under certain conditions.

However, current guidance, thin contribution margins, and ongoing volatility suggest that most investors would be better served by waiting for more consistent profitability and clearer evidence that capital-light revenue can scale. A track record of steady, profitable quarters (or a massive sell-off from here) would offer a more attractive entry point than trying to buy into a sharp (but arguably insufficient) pullback driven by risk-off sentiment.

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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.