Be careful, AMC. There’s a brand new meme inventory available on the market.
Shares in Opendoor Applied sciences Inc. (Nasdaq: OPEN) have been on fireplace over the previous week. Since Tuesday, July 15, OPEN inventory has surged greater than 188% as of Friday’s market shut. And right now, OPEN’s inventory worth is at the moment up an extra 27% in premarket buying and selling. Right here’s why, and what you should know in regards to the firm.
What’s Opendoor Applied sciences Inc?
Opendoor is an actual property tech firm primarily based in San Francisco, California. It was based in 2014. The corporate gives a web based platform that enables owners to shortly promote their properties by offering particulars in regards to the property. After the owners reply questions on their property, Opendoor will make them a proposal to purchase it straight.
As soon as Opendoor purchases a house from a person, it’s going to then usually make needed enhancements to the house after which promote it to a purchaser for a revenue. In different phrases, Opendoor is a house-flipping firm. It buys homes on a budget, fixes them up, and flips them for a revenue.
Opendoor went public by way of a particular goal acquisition firm (SPAC) in 2020, and it at the moment trades on the Nasdaq.
What’s the story behind OPEN’s inventory worth?
Lower than a 12 months after OPEN inventory publicly debuted on the Nasdaq, its shares surged. OPEN’s inventory worth went from round $11 per share in July 2020 to almost $40 a share at one level in February 2021, in response to information from Yahoo Finance.
However since then, the inventory has cratered. By the tip of 2022, CNBC notes, OPEN shares had fallen 92% to only $1.16 every. Opendoor’s inventory worth fell as a result of firm’s enterprise prospects, which received pummelled by rising rates of interest, rising Opendoor’s borrowing prices.
On the identical time, rising rates of interest led to a slowdown within the housing market, as demand for house shopping for slowed.
Just lately, OPEN shares had fallen under $1, placing the corporate prone to removing from the Nasdaq. The specter of delisting has prompted the corporate to think about a reverse inventory break up of as much as 1 for 50, aiming to spice up its share worth and thereby preserve its itemizing on the Nasdaq, in response to CNBC.
OPEN shares continued their regular decline till July of this 12 months, when, on July 15, the inventory worth all of a sudden started to speed up upwards. By Friday, July 18, the inventory had surged greater than 188% over the earlier five-day interval.
What’s inflicting OPEN inventory to surge?
The primary driver behind OPEN’s inventory worth surge over the previous week appears to be down to 1 particular person, in response to CNBC and Yahoo Finance. That particular person is hedge fund supervisor Eric Jackson.
Jackson runs EMJCapital, however should you have a look at Jackson’s X profile, you’ll see he describes himself as “The Carvana hedge fund man. All he does is attempt to discover the following Carvana over & over once more.”
He states this as a result of he’s the one who had the foresight to determine Carvana Co. (NYSE: CVNA) as purchase when the inventory worth was buying and selling within the single digits. In 2022, many buyers thought Carvana was close to chapter, however Jackson was bullish on the inventory.
Whereas CVNA hit a low of beneath $4 per share in December 2022, it surged greater than 1,000% in 2023. And its nice run has continued. On Friday, CVNA shares closed at nearly $348, up practically 170% for the 12 months.
Jackson was one of many few individuals to see the potential in Carvana when the inventory was getting hammered in 2022. And now he appears to suppose he’s discovered one other inventory with such potential in Opendoor.
On July 14, Jackson started tweeting persistently about OPEN shares, arguing that “it may very well be a 100-bagger over the following few years.” In a prolonged thread, Jackson mentioned he was bullish on OPEN as a result of it’s giving his hedge fund “$CVNA vibes.”
In keeping with Jackson, a number of the causes for this are that subsequent month, Opendoor is prone to report its first-ever constructive EBITDA for 1 / 4. It has additionally minimize prices aggressively and has few rivals left. As a result of this and different causes, Jackson argues that OPEN’s inventory worth may rise to $82 per share inside a couple of years.
Since Jackson’s July 14 posts—and his subsequent posts about OPEN—the inventory’s worth has surged greater than 188%.
Is OPEN the brand new meme inventory?
Persons are already describing OPEN as the brand new meme inventory. A “meme inventory” is the outline given to a inventory that turns into in style with retail buyers on social media. Phrase of mouth spreads on social channels in regards to the new “scorching” inventory, and shortly many merchants with brokerage accounts purchase shares in hopes of seeing large positive factors in a brief period of time.
GameStop Corp. (NYSE: GME) and AMC Leisure Holdings, Inc. (NYSE: AMC) have been traditionally two of the preferred meme shares, and their costs surged in the course of the pandemic as at-home retail investing noticed a renaissance whereas individuals have been beneath lockdowns.
On condition that many retail buyers on social media are singing the praises of OPEN after Jackson’s tweets, it does appear truthful to say OPEN is the brand new meme inventory of the second.
After all, that doesn’t make it a protected guess. Jackson lays out some compelling arguments for the inventory’s vibrant future. However in investing, nothing is ever assured. And whereas Jackson, and loads of others now, are bullish on OPEN, it’s price noting that there are voices on the market arguing that the inventory isn’t a purchase.
As of the time of this writing, in premarket buying and selling, OPEN shares are up one other 27% to round $2.86 per share.
