Editor’s note: This article has been updated to reflect recent changes in ETF offerings.
Opendoor Technologies (NASDAQ:OPEN) is having its moment of meme-stock stardom. The real estate technology firm, known best for its iBuying platform, is having its stock price soar almost 290% over the past 30 days, an unlikely hero in the most recent bout of retail-fueled mania. With the second-quarter numbers set to report Tuesday after the closing bell, investors are preparing for a potentially volatile showing.
- OPEN stock is on the move. See real-time price here.
And though most of the spotlight is focused on Reddit forums and short-squeeze talk, a less vocal segment of the market is riding along: Opendoor-exposed ETFs.
Meme-Stock Frenzy Collides With ETF Mechanics
Opendoor’s rapid jump has less to do with conventional valuation measures, and stems more from elevated short interest and a solid Q1 performance. The San Francisco-based company beat revenue estimates and provided positive guidance.
That type of buzz tends to creep into ETFs, particularly those that follow disruptive innovation, real estate technology, or small-cap momentum. Even a small position in a soaring stock can pump short-term ETF returns or introduce surprise volatility.
Also Read: Opendoor Stock Soars As It Dodges Delisting, Cancels Reverse Split
Below are some ETFs that could be receiving an unexpected boost from the Opendoor rally:
- Vanguard Russell 2000 ETF (NASDAQ:VTWO): This Russell 2000 index-tracking ETF has exposure to Opendoor, which is a part of the index. Although its exposure might be modest, a 290% increase can turn a blip into a boost.
- Invesco S&P SmallCap Momentum ETF (XSMO): As Opendoor builds steam, ETFs that follow technical metrics such as price strength and volume could be rebalancing its way, shining a light on open alongside other small-cap favorites.
- iShares U.S. Real Estate ETF (NYSE:IYR) or Real Estate Select Sector SPDR Fund (NYSE:XLRE): Though largely targeting traditional REITs, a few real estate ETFs have experimented with tech-powered housing models. A closer look at existing holdings will reveal whether Opendoor’s bash is spilling into defensive lists.
Warning: Meme Volatility To Come
While the ride has been thrilling, investors need to strap in for a reality check. Opendoor’s fundamentals are still under scrutiny, particularly since it operates in a softening housing market with elevated borrowing costs. Should Tuesday’s earnings fall short or the meme magic wear off, the comedown would be as quick as the climb.
For ETFs, the exposure can be capped in design, but the optics of having a meme rocket (or implosive) in the basket can still raise eyebrows.
For ETF investors, the question is: Is this a flash in the portfolio, or an ongoing trend in real estate disruption? Either way, the second-quarter earnings report could provide clarity.
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