Should Investors Close the Door on Opendoor?

Opendoor Technologies (NASDAQ: OPEN) surged in mid-2025 on a social media and meme stock wave. Now the company is pushing to separate from the online hype and prove itself worthy of buy-and-hold investors. Still, Opendoor's underlying business is highly speculative and too unproven in a difficult housing market.

Amid declining revenue, Opendoor's new CEO, Kaz Nejatian, is attempting to pivot and rebrand the company into a software and AI-first start-up. Even if he's successful in his endeavor, this model requires massive buy-in from home sellers looking to receive top dollar for their homes. A high-interest-rate environment and lack of supply only intensify the company's challenges, making Opendoor's profitability plan extremely difficult.

Welcoming home new and old leadership

To Opendoor's credit, the company is determined to find operational excellence. In September 2025, Opendoor shook up its leadership, bringing in Nejatian as CEO. The former Shopify COO has ambitious plans to significantly transform the company. From implementing a full return to office to ruthlessly cutting expenses, Nejatian is wasting no time increasing efficiency throughout Opendoor.

During the leadership shakeup, Opendoor's co-founders, Keith Rabois and Eric Wu, returned to the board of directors. The company also appointed Christy Schwartz as its new interim CFO.

Immediately, Nejatian promised stakeholders that the old Opendoor was no more. This new 2.0 version of the company would streamline processes and focus on operational efficiency. The new Opendoor believes software and AI can, and will, make the home buying process "easier and more joyful," according to Nejatian in the third-quarter earnings report. Nejatian believes that the company can achieve breakeven adjusted net income by the end of 2026.

Image source: Getty Images.

According to Nejatian, Opendoor will work on a path to profitability, focusing on three key pillars: scaling acquisitions, improving unit economics and resale velocity, and building operating leverage. Opendoor doesn't want to be held back by the macroeconomics of the housing market. However, as much as it may want to ignore the overall economy, investors shouldn't discount the importance of interest rates, consumer sentiment, and housing supply in the company's success.

The housing market is desperate for disruption, but the time it may take to achieve this is likely much longer than Opendoor and its investors would like. Opendoor's true believers and current users recognize that the company has strong brand recognition and the ability to generate goodwill among Americans seeking housing market innovators. Still, the fundamentals beneath Opendoor's exciting ideas aren't ideal for long-term investors.

No moat around this castle

Opendoor needs to prove it can be a good business through a full housing market cycle. The company's margins are already razor-thin, floating in the mid-single digits over the past couple of years. The company's business model, while simpler for customers, is capital-intensive and requires precision in pricing, renovation management, and reselling. Even small errors are costly for Opendoor. With hardly any room for mistakes, an economic downturn could be seriously detrimental to Opendoor's business.

The stock, which traded as high as $10.87 this year, is overvalued given that the business' revenue declined from $1.377 billion a year ago to $915 million in the third quarter. Homes purchased, sold, and in inventory were also all down significantly as of the company's latest earnings. Opendoor believes that, in many ways, this is the bottom, and it'll begin rebounding soon. If interest rates remain high and supply is dampened, though, that turnaround won't happen quickly.

A home for day traders, but not buy-and-holders

Investors considering getting in on the Opendoor run must consider that this is a speculative investment, where revenue can scale, but probably not profitability. There are just too many larger challenges to face. Opendoor still has much to prove in a complicated industry that isn't fast to innovate. The execution and economic risk should keep investors cautious.

The stock also fluctuates with tremendous volatility. Those looking to add traditional real estate would be better off with stable and income-producing real estate investment trusts. For more tech-friendly, growth-oriented investors, Zillow or Redfin's online buying and selling software appear to be the long-term frontrunners.

Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Companies, Shopify, and Zillow Group. The Motley Fool has a disclosure policy.