Opendoor Technologies Inc. (OPEN) is a real estate technology company that simplifies the home buying and selling process, essentially buying the home and then flipping it themselves. Through an online platform, the company makes cash offers on homes that need redevelopment or updating, make repairs and then put them back on the market while trying to lower broker fees. That is where the problem arises. Founded in 2014 and based in San Francisco, Opendoor offers a streamlined, hassle-free alternative to traditional real estate transactions.
as of February 7, 2023
In the last 12 months, Opendoor generated $16.5 billion in revenue, albeit at a net loss of $1.1 billion. What is the company’s path to profitability? In 2021, the total residential real estate market had more than $2.8 trillion. There is a lot of room for disruption since the average closing costs and commissions on a home sale can run as high as 10% with a baseline around 7% even on all-cash deals. That’s a $200 billion opportunity just on the residential side in the U.S. In the last 12 months, Opendoor generated $16.5 billion in revenue, albeit at a net loss of $1.1 billion. What is the company’s path to profitability? In 2021, the total residential real estate market had more than $2.8 trillion. There is a lot of room for disruption since the average closing costs and commissions on a home sale can run as high as 10% with a baseline around 7% even on all-cash deals. That’s a $200 billion opportunity just on the residential side in the U.S. This is another price to sales play for someone that can take on the risk. The company generates nearly $6 million in sales per employee, or $26 per share, and has seen a 23 times increase on the top line since 2017. Since it buys houses outright, the company’s revenue could continue to see geometrical growth in revenue over the coming years.
