For years, real estate transactions have been crying out for change. While I enjoy working with people in the field, the problem is that the “analog” method of buying or selling a home is incredibly outdated. Fortunately, with Open door technologies (NASDAQ:OPEN), we can bring this sector into the 21st century. With its digitized services, you can really reduce the grime, which makes the stock OPEN quite compelling.
Primarily, one of the biggest problems for homebuyers is what to do with their current home that they may have a mortgage on. With real estate being the biggest purchase most of us will make, having to pay an extra mortgage payment on the old house while making one for the new one is just not something people want to do.
Luckily, with Opendoor’s strong buying and selling services, you have a myriad of options, including selling directly to the business. If you choose this route, you can take your time finding the perfect home for you.
Once this is done, you can coordinate the closing date of the sale of your old house with the date of purchase of your new home, avoiding double payments. It’s a smart thought like this that has sparked a lot of interest in OPEN stocks.
Additionally, these conveniences have become incredibly relevant in the wake of the novel coronavirus pandemic. During the early days of the crisis, few people wanted to show their homes to strangers who could potentially have the virus. And while it’s true that much of that fear has subsided, for many others it’s still a powerful negative catalyst.
For example, a Deloitte survey found that most Americans will be uncomfortable in front of a movie at the box office until mid-2021. Having people in your house is a much more personal matter, which suggests that the OPEN stock still has that cynical incentive to upside.
OPEN Stock is not all open roads
While the business model itself is intriguing, it needs to translate into a sustainable model. Otherwise, shareholders could bail out OPEN shares. This is one of the reasons why my InvestorPlace It turns out that his colleague Alex Sirois is skeptical of the underlying company.
In his own words, “The bullish thesis for buying OPEN stock is that the company is digitizing the less-than-fun process of buying a home. But that alone is not a compelling reason to buy stocks now.”
Sirois went on to say, “A quick look at Opendoor’s cash position indicates that it has a lot more cash to end 2020 than it had at the end of 2019. But that’s simply the proceeds of the conversion of preferred stock into common stock.”
Additionally, Opendoor is generating heavy losses on far less revenue, indicating that the recent volatility in OPEN shares is not just sympathy trading with the broader tech sector. Instead, there could be something fundamental printing red ink.
From my perspective, it looks like the company represents a litmus test of its faith in economic recovery. Yes, we may see light at the end of the Covid-19 tunnel, but we could also face more pain economically. Overview, although the weekly jobless claims are in decline, they are still registering devastating figures.
This leads me to question the overall viability of the housing market. It’s true that affluent buyers decided to buy homes last year to take advantage of the lower rates, but that clearly doesn’t describe everyone’s situation.
In addition, the latest data on home loan activity has been showing a decline since about mid-January this year. Additionally, we saw a decline in loans during the fourth quarter of 2020. Could this have contributed to the decline in fourth quarter revenue mentioned by Sirois? I don’t think you can rule it out.
A possible technical clue
Finally, I find it interesting that following the OPEN equity volatility that began earlier this month, stocks rebounded from the 50-day moving average. Much like the associated fundamentals, Opendoor is a confusing beast.
For example, you have soaring housing prices, which implies high demand. At the same time, you have an economy that many believe is on life support – otherwise why the bitter debate over continuing stimulus checks?
Indeed, the techniques reflect this ambiguity. The OPEN stock did not rise convincingly above the 50 DMA. No, that would be too easy. Instead, he clings to it, suggesting he could go either way.
Personally, I’m not a big fan of these 50/50 setups (probably because I lose a lot of them). I have to say though that I don’t find the latest OPEN stock price action very compelling. For this reason, I will watch this curiously from behind the scenes.
As of the date of publication, Josh Enomoto had (neither directly nor indirectly) any position in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto helped negotiate major contracts with Fortune Global 500 companies. Over the past several years, he has provided critical and unique insights to the investment markets, as well as various other industries including law, construction management and healthcare.