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Opendoor Technologies (NASDAQ: OPEN) Stock is a Disruptive Housing Play

Monday, January 18, 2021 | Jea Yu
Opendoor Technologies (NASDAQ: OPEN) Stock is a Disruptive Housing PlayResidential 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: LYFT)of 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.

Opendoor Technologies (NASDAQ: OPEN) Stock is a Disruptive Housing Play

 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.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Opendoor Technologies (OPEN)1.6$18.81-22.9%N/AN/ABuy$45.50
Zillow Group (ZG)1.5$130.64-5.1%N/A-66.65Buy$167.50
Redfin (RDFN)1.4$61.78-6.2%N/A-123.56Hold$58.29
Uber Technologies (UBER)1.8$52.96-0.2%N/A-13.31Buy$60.21
Lyft (LYFT)1.5$61.82-0.1%N/A-11.51Buy$59.66
Square (SQ)1.3$202.56-7.3%N/A321.53Hold$203.56
Netflix (NFLX)1.9$505.83-1.1%N/A81.59Buy$580.62
Alphabet (GOOG)1.7$2,062.43+0.7%N/A39.85Buy$2,198.13
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7 Entertainment Stocks That Are Still Delighting Investors

2020 has created a real-life movie script that many production companies could have only dreamed of. But that dream has been a nightmare for many of the world’s leading entertainment stocks. Movie theaters and live entertainment venues remain shut down. The words “pent-up demand” have never resonated more. Consumers are desperate for ways to be entertained.

That may make it an odd time to consider looking at entertainment stocks. But that would be a mistake. In fact, some entertainment stocks have been among the biggest pandemic winners. This is a trend that is likely to continue as the holidays arrive. The phrase “home for the holidays” is likely to have a new meaning this year. That means consumers will still be looking for ways to be entertained. And now is the time for you to prepare your portfolio for that move.

To be clear, the novel coronavirus was not due to poor management from any company. And you can bet that in the future, many companies will leave some room in their balance sheet for future “acts of God.” But in the meantime, some entertainment stocks have been pandemic winners. And that means they will likely continue to be winners as long as the pandemic lingers.

View the "7 Entertainment Stocks That Are Still Delighting Investors".

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