Apologies to the $OPEN army but won’t be able to get a full pre-earnings article out before tomorrow earnings but here are my high-level thoughts heading into another blockbuster event.
Stock price has fallen a lot since last earnings so overall I would say expectations are lower; however, it’s so hard to handicap what’s going to move the stock given how hard this business is to value.
Overall, I’d say there’s a strong narrative up for grabs that Opendoor could be an AI-winner by finally disrupting the real estate space (fool me twice shame on me right?). We’re starting to see stories like this in other “legacy” sectors (see $CHRW) but it just needs to be proven out with the numbers.
I believe the most important metrics that investors will be looking at are:
Post-Kaz inventory performance - this basically sums up the whole she-bang. It’ll be interesting to see how / if they break this out but essentially Opendoor needs to show that the “Kaz magic” is real and that the homes they bought post his arrival are fundamentally positive margin. If they can make a compelling case for this then investors will be willing to write off all of the “Carrie” inventory (breakeven CM) and start to model “run-rate” performance (positive CM).
Additional services attach rate and “pro-forma” margin impact at scale - this is what gets big money excited. Showing clear growth and progress around attach rates and margin contribution for title, insurance, and mortgage will finally get the “Amazon for real estate” story off the ground.
Mortgage especially deserves a call-out as it has been a clear focus for the company and would be a huge “buyer unlock” in terms of accelerating buyer demand and resale. Also plays into the AI story as it’s an area clearly ripe for disruption (see $CHRW as a poster child for AI-powered stock rocket fuel)
Operating efficiency and net-income profitability guidance - at the same time Opendoor also needs to continue providing visibility on overall operating efficiency and when the “cash fire” is expected to stop. If there’s clearer line of sight into cash-flow profitability or a move up a quarter - investors will pay attention.
This is probably the biggest fundamental reason for shorts and any guidance around this could potentially accelerate position closing.
Worth a callout here is marketing spend and CAC efficiency. Kaz has explicitly said this is something they’re being very mindful of and I wouldn’t be surprised if they’re tracking to something crazy like 5x more marketing $ to acquisition efficiency with a combination of better analytics, better channels, lower rates, more overall consumer mindshare, and better pricing / offers.
Secondary metrics:
Updated acquisition guidance - http://accountable.opendoor.com has been a boon for retail investors but the company has barely managed to eeke out the bottom of the guidance so far. We’ll see what they say in terms of their guided range for Q1 acquisitions after their blockbuster week this week and hopefully heading into Q2.
Cash Plus - Cash Plus is a game-changer and one of the few “Carrie-legacy” ideas that the new team has kept in place. However, there hasn’t been any public data around what the split is between the various seller options or the downstream impact to CM and margin variance. Could be big if they decide to share these so early.
There’s so much I didn’t cover (partnership, market launches, buy direct) but I’ve highlighted what I think will move the needle in terms of stock price tomorrow. Still, we were thrown in a loop with the warrants last earnings call and there could well be another big thing brewing tomorrow.
My gut says we’re in for a treat, I guess we’ll just have to wait and see.