Opendoor Technologies Inc【OPEN】株式ニュース

Startups always issue additional shares to employees as compensation to keep their overhead down and to keep essential employees. Quite often these shares are in the form of stock options which allow the employee to sell their shares at the current price as they vest quarterly. In the case of OPEN most, if not all, of these shares have been issued at a value much higher than the current price. When the SPAC merger was completed and OPEN valued at $10 a share, there were 480,000,000 shares outstanding or a valuation of $4.8B. Today there are over 715,000,000 shares which is not an unusual jump in outstanding shares over nearly 4 years for a startup.

That said, it will be about 50% more difficult for OPEN to reach $10 a share as there are roughly 50% more shares to move. Also, on average we can expect an additional 15MM shares to vest every quarter. That's about 2% additional shares each quarter. At this pace, by the end of 2026 there will be almost 850MM shares outstanding. If there is a recession between now and then, all bets are off as OPEN will still have to move homes quickly to keep up with debt payments and may well have to dump homes at a loss.

Two other companies Zillow and Redfin followed OPEN into the iBuying market in 2020 when it appeared that iBuying would take over a considerable portion of the market. Zillow got out almost immediately, (2021) when it was clear their algos could not price homes properly. Redfin has remained in the market and is getting crushed. Both RDFN and OPEN have market values in the $1+B range while Zillow is valued at over $11B. Just looking at RDFN debt to equity ratio, there is no value in RDFN. I don't see how they avoid bankruptcy in this difficult market.

The last and maybe the most concerning issue for OPEN is that their profit model is built on being able to slightly undercut the traditional real estate sales model. Since NAR lost the class action suit it appears that buy side realty organizations may no longer expect sellers to pay their 3% commission and buyers will begin to negotiate a lower cost. In fact a reasonably experienced buyer will no longer need a buy side agent and the sell side agent will no longer be able to take that commission as their own.

As I said the other day, I wouldn't say OPEN will fail but I see a very bumpy road ahead for investors. Traders may actually do well as volatility is their friend.

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