To HODL or not to HODL? Opendoor stock plummets after Reddit-fueled surge

Reddit giveth and Reddit taketh away.

The infamous subreddit Wall Street Bets has turned Opendoor into its latest meme stock, pushing up the price of the iBuyer’s equities to a peak of $3.99 on Tuesday — a shocking rise of 537%.

But the price of the stock began to sink toward the closing bell later in the day, and as of midday Wednesday, the price had fallen to a low point of $2.05. That’s a drop of nearly 50% in just a few hours of trading. 

The good news for owners of Opendoor who are pursuing a strategy of HODL — or “hold on for dear life,” a phrase that became commonplace among retail investors during the NFT boom in 2022 — is that the stock is still up 300% since it bottomed out at $0.51 on June 25.

Offerpad — Opendoor’s iBuyer rival — benefited from the rush into Opendoor as well. Its stock bottomed out at $0.92 on June 24 but shot up to a peak of $4.95 on Monday, a 438% rise from its low point.

That stock has also fallen along with Opendoor, however, trading at $2.19 as of noon Wednesday. That’s a 56% drop from its Tuesday peak but still up 238% from its bottom.

There doesn’t appear to be any business reason for the two stocks to “moon.” Business has been great in the iBuying space, as both companies have dramatically scaled back the pace of their home purchases, which serve as their core revenue streams.

To make up for sagging business, Opendoor has instigated a series of layoffs that analysts previously told HousingWire “cut to the bone.”

The most recent news from Opendoor was a late June announcement that it’s rolling out an app called Opendoor Key Agent for real estate agents who enroll in its Key Connections partnership program.

While Opendoor believes this will help extend the reach of its for-sale inventory, analysts at financial services firm Keefe, Bruyette and Woods (KBW) don’t see it as a major revenue driver. In a note circulated last week about Opendoor, KBW called the Opendoor surge a “retail squeeze.”

“We believe [the stock price jump] is a retail-driven squeeze as the stock has become popular on social threads like Reddit and X,” the note reads. “We remain cautious on the shares at current levels as OPEN’s ability to scale profitability remains uncertain, particularly as the company maintains a conservative posture facing an uncertain housing backdrop.”