Opendoor Technologies (NASDAQ:OPEN) shares slipped on Wednesday as the home-flipping platform’s weaker-than-expected guidance and shift to an agent-led sales model deepened concerns over mounting losses and strategic direction despite a return to profitability last quarter.
Keefe, Bruyette & Woods analyst Ryan Tomasello downgraded the stock from Market Perform to Underperform on Tuesday, maintaining a $1 price forecast.
Tomasello cut his rating on Opendoor following the company’s weak second-quarter results and steeply lowered outlook.
Also Read: Opendoor’s First Profit Since 2022 Fails To Calm Investor Criticism Of CEO
Analyst Tomasello has revised his financial forecasts, lowering his expectations for 2025 and 2026. He now projects an adjusted earnings per share (EPS) loss of 27 cents for 2025 and 22 cents for 2026, which is down from his previous estimates of a 21 cent and 14 cent loss, respectively.
Additionally, he has lowered his adjusted EBITDA outlook for the same periods to a loss of $72 million and $40 million, a significant drop from his earlier projections of a $44 million loss and a $30 million gain.
He noted that management guided second-half revenue about 40% below consensus and announced a pivot to an agent-led distribution model. While high retail investor interest may buoy valuation, Tomasello expects widening losses and strategic uncertainty to pressure shares, which trade near the high end of historical multiples.
His $1.00 price forecast remains unchanged, equating to 1.4 times fourth-quarter 2025 estimated BVPS and 1.3 times 2026 estimated gross profit.
The downgrade followed second-quarter revenue of $1.567 billion, up 4% year-over-year and above KBW’s $1.516 billion forecast, but contribution profit of $69 million fell short of his $73 million estimate.
Opendoor guided third-quarter revenue to $800 million–$875 million, well below KBW’s $1.039 billion projection, with an adjusted EBITDA loss of $28 million–$21 million.
Management also expects a similar sequential revenue drop in the fourth quarter, driven by a mix of older, lower-margin homes that could delay margin improvement until after 2025.
Tomasello projects year-end 2026 liquidity of $649 million, before debt maturities and working capital needs.
Price Action: OPEN shares are trading lower by 2.83% to 2.400 at Wednesday’s last check.
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Photo via Opendoor
