The Opendoor stock price has gone parabolic this month, soaring to a multi-month high of $4.91, as we predicted. It jumped by over 470% from its lowest point this month, bringing its market capitalization to about $2.3 billion, down from an all-time high of $25 billion. 

This article explores why the OPEN share price has surged, and why it may plunge in the coming days.

Why Opendoor stock price plunged

Opendoor is one of the biggest fallen angels in corporate America. It is an online real estate company that simplifies the home-selling and buying process. It uses its technology to value houses, then it makes a cash offer, and pays it after carrying out inspections. 

Opendoor then sells the houses it has bought, often at a profit. Buyers can browse the homes listed on its website, tour them, and then make an offer. These buyers must always use its partner agents. 

The Opendoor stock price has been under pressure in recent years as the company’s business has faced significant challenges. One of the most notable issues is that its growth momentum has slowed, and losses have grown. 

Opendoor’s annual revenue peaked at $ 15.6 billion in 2022 as the home-buying frenzy accelerated. It then made $6.9 billion in 2023 and $5.15 billion in 2024 as mortgage rates surged. 

The company has also made substantial losses over the years. It lost over $392 million in 2024, $275 million in 2023, and $1.4 billion the previous year. As a result, there have been concerns about its balance sheet and the ongoing cash burn.

Opendoor stock price has also plunged because of the ongoing dilution as its outstanding shares have soared. Data shows that its outstanding shares jumped to over 726 million, up from 540 million in 2020. 

READ MORE: Opendoor stock price is tanking — but this chart signals a rebound

Why the OPEN stock price has surged

The Opendoor share price has surged this month as it has become the newest meme stock in the industry. This surge happened after social media users started promoting the stock, as we predicted.

One of those users is Eric Jackson, a hedge fund manager who recently initiated a stake in the company. He expects that it will ultimately surge to $82.

It is common for highly shorted companies to undergo a short squeeze when they are being promoted on social media. A good example of this is companies like GameStop, AMC, and BlackBerry.

Still, there are reasons why the Opendoor stock will crash soon. First, history shows that stocks that surge because of social media activity often plunge once the hype fades. 

Second, the Opendoor stock price will crash because of its ongoing slow growth. Analysts anticipate that the upcoming revenue will be $1.5 billion, a 0.77% decrease from the same period last year. It will then make $4.9 billion this year, down by 4.7% in 2024. 

Third, it is likely that mortgage rates will remain at an elevated level for longer than expected as inflation remains above 2.0%. Analysts anticipate that the Fed will start to cut interest rates either in September or in October. Opendoor stock is usually affected by these mortgage rates because they impact activity in the real estate market. 

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