Opendoor Technologies Inc. said it expects to accelerate its timeline for selling through money-losing inventory, as the data-driven home-flipper looks to move on from a tumultuous year.
(Bloomberg) — Opendoor Technologies Inc. said it expects to accelerate its timeline for selling through money-losing inventory, as the data-driven home-flipper looks to move on from a tumultuous year.
Opendoor, pioneer of a business model called iBuying, has sold or entered into contract on two-thirds of homes that it acquired during the second quarter of last year, right before a rapid correction in home prices left many of those properties worth less than the company paid to acquire them.
The company, which aims to have sold or struck deals on 85% of those houses by the end of the first quarter, said it now expects to sell through the rest of the properties earlier than expected in 2023, it said in a letter to shareholders Thursday.
Shares fell 8.8% in pre-market trading Friday. Opendoor said in its shareholder letter that it’s recently acquiring homes that are more likely to deliver healthier margins, but KeyBanc Capital Markets analysts wrote that the company faces limited buying opportunities in the current market.
Read more: Wall Street Is Losing Out to Amateur Buyers in the Housing Slump
Homebuyers, meanwhile, showed new signs of life early this year, which should also help the company sell off old inventory and allow it to return to positive margins by the second half of 2023.
“We have observed an increase in consumer housing demand in early 2023 that is above typical seasonal patterns, which has translated to stronger clearance rates for us and the housing market as a whole,” the company said.
Opendoor reported an adjusted net loss of $467 million in the fourth quarter, slightly better than the average analyst estimate compiled by Bloomberg. Those results cap a year in which the company installed a new chief executive officer and watched shares fall by roughly 92%.
Now, the company must show that it can ramp up acquisitions in a housing market defined by high mortgage rates and reluctant home sellers.
In an interview, CEO Carrie Wheeler said that the company can buy and sell homes profitably in a period of higher mortgage rates, but the recent volatility is a bigger impediment.
“People move in all rate environments,” Wheeler said. “The key for us is rate stabilization more than return to low rate levels.”
(Updates with shares and analyst comment in fourth paragraph, CEO comment starting in ninth paragraph.)
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