Opendoor has appointed a new interim Chief Financial Officer as the company’s stock experiences a sharp surge. The leadership change comes at a critical time for the real estate technology firm, as it navigates market challenges and investor expectations. This update highlights what the interim CFO role means for Opendoor’s future growth, financial strategy, and overall market confidence.
Stay tuned for more updates on business, finance, and market news.
00:00The CFO of Opendoor is departing, the company naming Christy Schwartz as interim CFO.
00:05Effective at the end of the month, Schwartz has spent more than eight years as the company's chief accounting officer,
00:11also serving as interim CFO in 2022.
00:14That was for nearly two years.
00:15Now, Opendoor, a lot more than the fundamental story.
00:18It's the latest meme stock to go crazy in this market.
00:21Went from trading below a buck back in mid-July and on Friday, settling just under $10 a share.
00:27Joining me now to talk all things Opendoor and the state of the meme rally is Luke Kawa.
00:32He is the markets editor at Sherwood News.
00:34Luke, great to see you.
00:35Let's just start with the Opendoor story, and you've been covering this fairly aggressively.
00:40I'm curious what you make of the fundamental story at the company right now,
00:46which all kind of began with like, hey, it's $1.
00:50Hey, maybe it should be $10.
00:51Now we're almost at $10.
00:53And what the fundamentals are behind that.
00:56Maybe we can get into some of the meme stuff later.
00:59So I think it's interesting in terms of the fundamental turn that you've seen in terms of the housing market.
01:06You do see some green shoots and things like mortgage applications recently and things of that nature.
01:11For Opendoor, a lot of the move or the expected turn in the housing market and housing activity
01:16has taken place well ahead of a change in fundamentals.
01:20In fact, in its second quarter earnings, it was able to book some positive EBITDA.
01:23Revenues came in a little higher than expected, but they did say the third quarter would come in a fair bit worse than analysts at the time had expected.
01:32So really, the big catalyst for the stock has been the expected change in the fundamentals that the retail crowd very much hopes will happen under this new leadership,
01:42which includes a couple of the old co-founders and Shopify's old COO, Kaz Netetian.
01:49So it's really a story much more of the fundamentals that people are willing to dream on,
01:55given the opportunities in the housing market, more than it is something that has fundamentally positively turned.
02:01You know, if you look at EV to sales ratios, it's pretty much a fair bit ahead of Compass.
02:08I think you can argue that arguably Opendoor has more leverage to a positive turn in the housing market than Compass.
02:15But this is not a move that has happened yet on fundamentals.
02:19It's based a lot on expected improvements in the fundamentals.
02:22Yeah.
02:22So let's talk about the expectations and the folks who have them.
02:27You had a great story this morning on Sherwood talking to a number of retail shareholders,
02:31individuals who own the stock and kind of the story they're seeing.
02:35And I'm curious, you know, from your perspective now as journalists previously in money management,
02:39just the role that these things play within the market and how quickly it feels like you can get a large group behind an idea
02:48and they now have enough sway to, like, actually see this thing through.
02:52It's not it's just not a silly part of the market anymore.
02:55It's a real factor in kind of driving the daily flow and the daily, you know, thought around where are we at,
03:02you know, much more broadly than a name like Opendoor.
03:06Yeah.
03:07Yeah.
03:07For instance, like Goldman Sachs basket of the stocks that retail traders own the most.
03:12It's up over 13 percent in the past 10 days.
03:14It's on a 10 day winning streak for its first time ever.
03:16So this is not simply an Opendoor story.
03:19And but Opendoor, what I think is very unique about it is the extent to which these flows have changed the fundamental picture.
03:28I don't think you get Shopify COO coming jumping back over in the event that you don't get a big increase in the stock price.
03:36I don't think you get the co-founders coming back to play a more active role on the board of directors unless you have that interest.
03:43So in talking with a lot of the retail investors, one thing that's really, really struck out is transparency, open communication.
03:51The fact is that the shareholders that have been aggressively buying Opendoor down when it was at, you know, 50 cents, a dollar, four dollars.
03:58What they've been asking for, they have pretty much completely got.
04:02They didn't want the old CEO in.
04:05She's since resigned.
04:06They wanted Keith Ruboy in particular back on the board, one of the co-founders.
04:12He's come back.
04:13They wanted an end to the 10B, to the 10B kind of the automated selling programs that insiders have.
04:21Those have been taken out.
04:22So now it's like you have convinced and you have acted upon the wishes of the people who had the most passion and who were in at the ground floor.
04:31You've won them over and they've been showing that they're willing to buy more on these positive catalysts.
04:36Now the question is you still have to convince the rest of the world and you have to do that both through putting it up quarter after quarter
04:42and by kind of showing some more headway and taking on what I would call, you know, the three spreads that Opendoor has to kind of attack.
04:50That's the spread between what they're going to buy homes at, what they're going to sell homes at,
04:54the spread of what they're effectively getting by trying to cut agents out of the equation, capturing that spread.
05:01And if they move kind of more into the mortgage financing space, well, you know, that's the spread between what they're lending and what they're borrowing at.
05:10And, you know, moving maybe a little bit away just from Opendoor specifically, I'm curious what you make of the meme stock, that presence in the market today.
05:19I mean, you mentioned Goldman Sachs has a basket that tracks it.
05:22I mean, it seems to me it's just a more serious part of the conversation and that these things do stand for something other than, you know, like a lark.
05:29Like it's not, you know, there's a lot of real money that is chasing these ideas, whether it is the playbook that Eric Jackson is running
05:36or just this notion that you can get enough capital behind enough ideas around certain stories that you can create a real trade out of it.
05:45What do you make of the meme rally, the meme presence in the market?
05:49It just doesn't feel like it's going away.
05:51And, you know, how much of a sentiment barometer or let's say sentiment barometer is it that you look at when you're thinking about, you know, markets on a day-to-day, week-to-week basis?
06:00So I see really two things at play here.
06:03First is that I would emphasize when you think retail investor, you think someone perhaps with a limited net worth sitting behind or like making a trade or two in their brokerage account.
06:14Pretty much all of the folks I talk to who are very actively involved in Opendoor, they are accredited investors by any other name.
06:21If they wanted to flip the switch, they qualify based on net worth, based on income.
06:26So these are real people with a lot of money.
06:29So I think that's one thing first that, you know, we should perhaps probably re-clarify how we think about retail investors when a lot of this is really kind of more akin to high net worth investors moving markets.
06:41So that's a starter.
06:42The second, I think you really, really cannot overplay enough the role of weekly options in the market in terms of being able to influence, drive, and precipitate bigger moves in stocks.
06:56So, you know, for instance, a lot of the folks I talk to, they straight own the stock.
06:59They like the stock.
07:01But when the stock is getting a positive catalyst and it's going up, what you are really also seeing is in addition to active buying of just the underlying stock,
07:10you see very, very aggressive buying of near and out of the money call options with an expiry at the end of that Friday.
07:18That has in itself a kind of positive reinforcement effect in terms of what it creates in terms of demand for the stock.
07:24So what I see in this is like, yes, it's a we now know by virtue of market structure that there are ways to have very strong, nearly self-sustaining moves up to a point.
07:37You kind of need more volumes and more interest to keep it going absent positive turns in the fundamentals.
07:43But we know that this happens.
07:45I know that market makers are certainly aware of it in terms of how spreads have changed even since the initial kind of GameStop 2021 episode there.
07:54So it's a feature of markets.
07:55And for me, it tells me that people are a lot more active in the stock market.
08:00And they're using it not only to kind of bet on turnaround stories through just owning the stock.
08:05They're also using it as a speculative device in terms of short-term gains.
08:09And that is pursued aggressively in the options market.
08:12All right, we'll go really, really deep on market structure next time.
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