Markets
Collision 2023 - Day Two
Kaz Nejatian, then Shopify COO, now Opendoor CEO (Ramsey Cardy/Getty Images)

Key takeaways from Opendoor’s Q3 earnings call

A lot was said, and none of it gave the stock a boost.

Luke Kawa

Opendoor Technologies reported Q3 earnings that were not well received by the market, with shares cratering in after-hours trading on Thursday and continuing to be mired deep in the red on Friday.

“Deep in the red” also describes its income statement in Q3 and the outlook for Q4: adjusted EBITDA of -$33 million was well below the Street’s estimate for -$23.7 million as well as Opendoor’s previous guidance. In Q4, that’s poised to swell to “the high $40 millions to mid $50 millions,” per management.

Here are our top takeaways from the Q3 earnings call that followed the release of these results:

  • The operational strategy is to buy more homes, faster, and flip them for a small profit with haste.

    • CEO Kaz Nejatian said the weekly number of homes the company entered into contracts to buy went from 120 on his first day of work to 230 by the end of October.

    • “Our business plan is simple: buy and sell lots and lots of homes quickly, be operationally excellent, and increase our value to each homeowner by launching services like mortgage, insurance, and warranty,” he said.

  • There’s low-hanging fruit on expenses to cut:

    • Nejatian said he was “shocked” to learn that one of Opendoor’s biggest 1H expenses were payments to a well-known consulting firm.

    • Per Chairman Keith Rabois and EMJ Capital’s Eric Jackson, Opendoor had about 1,400 employees when Nejatian joined the company. The CEO said that number is now down to 1,100.

  • The majority of its 2030 convertible notes were refinanced with equity.

    • “Earlier today, we reached an agreement to retire the majority of these notes,” Nejatian said, adding that this avoids a situation where the company could have been forced to repay these in full before the end of 2025.

  • Real estate tokenization is certainly in the cards, timeline TBD:

    • “I dont want to say were going to do this next week, but I generally cant imagine a future where real estate is not tokenized. And I also cant imagine a future where Opendoor isnt leading innovation in real estate,” Nejatian said. “Weve begun talking with partners about how we can work across stablecoins and tokenization. The work is active. Were very serious about it, and well tell you more when we launch something.”

  • Perhaps most importantly (and discouragingly, for Opendoor bulls), nothing that was said during this call was considered to be a meaningfully positive catalyst by markets:

    • Shares ended the conference call a little lower than where they were when it kicked off.

More Markets

See all Markets
Dickens, Great Expectations, He said, Aha! would you?

Tech tumbles as momentum stocks run into a blowout jobs report and a wave of profit-taking

The AI trade is under some pressure, taking prices back like... a few days. President Donald Trump is not a fan of the price action.

Trump Administration Considers Reclassifying Marijuana As A Less Dangerous Drug

Trulieve to list on NYSE, a first for US cannabis sector

More may be on the way: several other US cannabis companies have announced reverse stock splits with the intention of listing on a major exchange.

markets

Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemons geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected halo effect across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemons valuation has already been steadily compressing for years. While it was once one of retails richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi ONeill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brands growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

Latest Stories

Sherwood Media, LLC and Chartr Limited produce fresh and unique perspectives on topical financial news and are fully owned subsidiaries of Robinhood Markets, Inc., and any views expressed here do not necessarily reflect the views of any other Robinhood affiliate, including Robinhood Markets, Inc., Robinhood Financial LLC, Robinhood Securities, LLC, Robinhood Crypto, LLC, Robinhood Money, LLC, Robinhood U.K. Ltd, Robinhood Derivatives, LLC, Robinhood Gold, LLC, Robinhood Asset Management, LLC, Robinhood Credit, Inc., Robinhood Ventures DE, LLC and, where applicable, its managed investment vehicles.