Residential real estate digital sales platform Opendoor Technologies, Inc. NASDAQ: OPEN
has garnered just as much publicity for its special purpose acquisition company (SPAC) reverse merger listing as its product, which is similar to Zillow NASDAQ: ZG
offering both residential home buyers and sellers to transact through the platform. Shares are trading under its $32.39 highs as the market digests this newly minted listing. The single family housing boom
triggered by the pandemic
continues to accelerate. From a valuation perspective, shares are “cheap” compared to Zillow, Redfin NASDAQ: RDFN
and similar platforms. Risk-tolerant investors looking for a value play riding the residential real estate surge can looking for opportunistic pullbacks in shares.
Opendoor Operating Model
Opendoor seeks to provide a “frictionless” home buying and selling experience at the lowest cost and highest customer satisfaction. The difference with other platforms is that Opendoor actually purchases inventory from sellers and offers them out to buyers, rather than connect buyers directly with sellers. The Company is more than a middleman, but actually flips the properties to arbitrage profits while collecting fees on both sides. The Company uses sophisticated proprietary algorithms and predictive analytics to determine fair value and pricing on both sides. For sellers, it collects service and estimated repair fees and fast closings averaging 15 to 20 days. For buyers, it provides “interaction-less” home tours, property information and financing services. The founder of Opendoor, Eric Zu, is well versed in real estate digital platforms as he flipped his first platform, Trulia to Zillow for $2.5 billion in 2015. The Company sold 18,799 homes in 2019 with full-year revenues topping $4.7 billion, up 161% year-over-year (YoY).
World Class Management
In addition to CEO Eric Zu’s experience, the management of Opendoor comes from some of the most iconic fintech and digital innovators in the world. Since Opendoor seeks to be the Uber NYSE: UBER and LYFT NASDAQ: LYFTof the residential real estate market, it’s only suitable that some of its top executives come directly from these unicorns including its Head of Seller Product (Uber), Head of Engineering (LYFT), Head of Design (Uber) and Head of Finance (Uber). It’s Chief Product Officer was VP of Products at Netflix NASDAQ: NFLX and its Chief Technology Officer was the former Head of Data Science at Square NYSE: SQ. Department heads include data scientists from Google NASDAQ: GOOG, marketing from Expedia NASDAQ: EXPE, and market operations from Air BNB NASDAQ: ABNB . Management is literally like the Justice League of Digital and Fintech.
Reverse Merger Through SPAC
Opendoor went public through a reverse merger on Dec. 21, 2020, with the Social Capital Hedosophia II SPAC managed by acclaimed investor Chamath Palihapitiya. Palihapitiya has been involved with various well-known public companies including Virgin Galactic NYSE: SPCE, Slack NASDAQ: WORK and Palantir NASDAQ: PLTR. With all the hype about SPACs, the reality is the newly listed shares often experience a sell-off during the initial days of the new listing due to the unwinding of positions by early investors contingent on lock-up and subscription agreements. Opendoor shares regained its footing after plunging to lows of $21.41 after peaking at the $32.39 highs. Prudent investors looking for exposure in a still “under the radar” digital real estate platform can look for opportunistic price pullback levels in Opendoor.
OPEN Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precision view of the near-term playing field for OPEN shares. The weekly rifle chart has a stalled uptrend with a make or break hinging on the weekly stochastic. The weekly 5-period moving average (MA) support sits at $26.36 just above the daily market structure low (MSL) buy trigger above 26.21. The weekly market structure high (MSH) sell triggers under $22.03, which is just below the weekly 15-period MA support. The weekly stochastic will either cross back up to power another leg up on the weekly pup breakout or form a mini inverse pup down forcing shares to test the weekly 15-period MA and/or trigger the weekly MSH. The daily rifle chart has a potential breakout attempt on the daily stochastic mini pup with a rising 5-period MA support at $26.21. The initial coil peaked off the $29.09 Fibonacci (fib) level before coiled off the rising daily 5-period MA. While the daily trying to reverse the downtrend, the stalled weekly stochastic can provide prudent investors with opportunistic pullback levels at the $25.68 fib, $24.45 fib, $23.57 fib, $22.04 fib and the $21.04 fib.The upside trajectories range from the $30.91 fib up towards the $43.23 fib level.
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