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
markets

SpaceX gets a wave of bullish ratings from Wall Street analysts

SpaceX received more than a dozen positive analyst calls on Tuesday — including from major Wall Street banks — as they initiate coverage on Elon Musk’s space and AI company.

SpaceX went public on June 12 at a $2.2 trillion valuation, the largest debut in history. While the company hasn’t yet posted a profit, it seems to have convinced Wall Street that it will get there and grow its valuation on the way.

Of the at least 17 analysts that gave a rating on Tuesday, all but one gave it a “buy” or “outperform” rating. MoffettNathanson was "neutral."

The ratings come as SpaceX joined the Nasdaq 100 index, a benchmark tech-heavy basket of companies that underpins millions of portfolios. The inclusion adds built-in demand for the stock from index funds and ETFs.

Still, SpaceX fell more than 5% on Tuesday amid a broader sell-off, and is currently effectively flat from its opening price of $150 a share.

markets

Nike sinks to lowest level since 2014 after warning of “challenged” sales environment in Q4 report

Did Nike do it?

Investors had a mixed reaction after the global sports apparel company reported its fourth quarter earnings on Tuesday after the bell. Shares initially rose 5% as Nike beat out Wall Street expectations amid a hefty tariff refund bonus. However, the stock then sank to its lowest level since August 2014 in postmarket trading.

Here are the Q4 numbers:

  • Revenue of $11.0 billion (estimate: $10.8 billion).

  • Adjusted earnings per share of $0.20 (estimate: $0.12).

Ahead of this report, Nike warned that results would be flattered by a one-time tariff refund (now estimated at roughly $0.52 per share for the bottom line). That gave the company an extra cushion in snapping its streak of seven quarters of year-over-year profit declines.

Over the past year, the company had been punished by tariffs on imported goods, stagnant consumer spending, and increasing competition from other footwear brands like New Balance, Adidas, and Hoka.

Outgoing CFO Matthew Friend deemed it an “increasingly challenging operating environment, where sell-through remains challenged.”

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.