Graduated in economics/finance馃搱 Football 鈿斤笍 coach of 45 little devils $OPEN long term investor 馃殌
Joined April 2020
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馃毃 $OPEN Clearing old homes went actually pretty well this week with 253 sales (as we could already see in Aubers dashboard). Hope they keep that pace.
馃毃 $OPEN down to just 330 contracts this week. The lowest since February in the best period of the year. We're now super far down outside of the trend. Just after yields went down and they increased the marketing spend to 4x. For that?
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$OPEN @nejatian How will you catch up in a worsening environment which probably will get even worse now? I know you said you will, but HOW? How will you become profitable? What will be the revenue mix for that? Which products will do how much? We'd like more info about your plans
Those are not projections. That is the range we said we need to be in to be on track for ANI profitability for next year. We are behind, as I said last week. We are working on catching up. But we aren鈥檛 going to make wrong risk decisions in this environment. We have a lot of fuel and need to work on a few things before we put our foot on gas.
Btw, I know folks want to hear more from us. Bu the rule for flying a plane in rough weather is aviate, navigate, communicate. Right now, we are very focused on navigation.
$OPEN Potential sales up to 333 again. Probably a mix of falling rates and moving homes at discounts. That said, new listings are super weak.
Source @Aubermark dashboard
$OPEN another point of critics is the reporting. To us a contribution margin of -1% in Q4 looks like zero improvement. Why are you not reporting Doma, mortgage and other things separately? How much does a 3P home make? How was the marhin of 2P compared to 1P? What drove us down?
$OPEN Have price cuts reached their peak? Are we heading towards a more stable environment?
UPDATE: As of this morning, 44.7% of all US homes for sale are now undergoing price cuts.
This time last week, it was 45%. This is a 30 basis point decline week on week. It's possible we have topped out on national price cutting activity as sellers are exiting the market entirely ahead of holidays. Seeing ~20k listings taken down over the last 7 days.
Two tiers continue to emerge at the top of price cutting behavior.
Tier 1 (highlighted in white) - Danger zone:
Oregon: 53.5% (-10 basis points week on week)
Colorado: 52.9% (-30 basis points week on week)
Indiana: 50.9% (-70 basis points week on week)
Washington: 50.7% (-50 basis points week on week)
North Carolina: 50.4% (-40 basis points week on week)
Tier 2 (highlighted in blue) - Elevated on watch zone:
South Carolina: 49.9% (-20 basis points week on week)
Texas: 48.4% (-20 basis points week on week)
Utah: 48.2% (-20 basis points week on week)
Arizona: 47.9% (-50 basis points week on week)
Georgia: 47% (-40 basis points week on week)
Dropped out of tier 1 and 2 this week:
Tennessee: 46.4% (-60 basis points week on week)
$OPEN My common sense says this administration is so pro AI and also wants to fix the broken housing market, that it's very unlikely that opendoor (which was designed to fix the market) faces any restrictions from the housing act. They are also in touch with the treasury about it
A few points I'd like to highlight regarding the past few days:
- I think Opendoor chose not to provide direct Contribution Margin (CM) guidance for Q4 because it is more difficult to forecast than revenue. Over the last quarters, CM has come in below management鈥檚 guidance. For Q3, the forecast was 4.0-4.5%, yet the company reported 3.3%. A similar situation occurred in Q1, management indicated it would be the strongest CM since Q2 2024, which implied a range of roughly 4.7-6.0%, but it ultimately came in at 4.4%.
That said, the company's AVG CM for the year currently stands at 4.5%, which is not bad. Even if Q4 brings that figure down and the annual average ends up closer to 3%, it would still be in line with 2025 levels while supporting a larger inventory base. The tighter the CM, the more inventory volume you need to transact.
- I believe last Friday's sharp selloff was driven by a combination of factors. In the risk section of the 10-Q, the company stated that it cannot guarantee it will not be classified as a "large institutional investor." Based on the legislation written in July, it arguably should not fall under that definition. However, the ambiguity introduced by the Treasury's draft guidance published in October has left the situation unclear, and the company itself acknowledged that it is closely monitoring how the rules are ultimately finalized.
I think retail investors are generally more comfortable with language such as "no assurance" than institutional investors and funds, even when the most likely outcome remains favorable for the company.
On top of that, stock-based compensation (SBC) continues to be a frequent point of criticism among both algorithms and investors discussing the company. Looking at the financials from the outside, it's easy to see why many people focus on the annual net loss figure, which is heavily impacted by SBC expenses. That is not to say the company is not currently losing money, but rather that the accounting presentation makes those losses appear significantly larger than the underlying economic reality.
- It's also worth remembering that the company has only been in rebuilding mode for about a year. That's a very short period of time to evaluate execution. I wouldn't even classify the major declines in the stock price as evidence of poor execution. The entire real estate sector has been under pressure due to macroeconomic conditions. This is a structural issue affecting the industry as a whole, not something unique to Opendoor.
$OPEN why to hide the negative Q4 contribution margin? Better to put out all negatives now.
Like this some folks who can't calculate will still hope for a positive margin in Q4 and get surprised badly. With a further decline of the stock price as a result...
$OPEN path to ANI profitability? Sounded more like fuck around and find out in the call than a real plan.
$OPEN We're at 2P now making 50% of sales, we have a lot of mortgages live, Doma is live. Other products and lots of improvements. So how the hell can contribution margin be negative in Q4? Would it have been -5% without those improvements? Why are we still SO bad.
@nejatian you gave us a picture at the Q1 call that you improved everything that much, that cohorts would do so well now, you told us that macro wouldn't matter anymore and now we're here and the numbers look exactly like the ones Carrie would've delivered in a market like this.
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$OPEN CFO: "The higher marketing spend also reflects seasonality. Marketing in the fall and winter helps us acquire homes ahead of the spring and summer selling seasons when buyer demand is typically stronger."
Where are those higher acq? 4x marketing for 450 contracts p week?
$OPEN another thing we learned: the great looking 7200 contracts in the accountable dashboard from June to August, turned out to be just 4800 real purchases. Implying a cancellation rate of 30%. That's why we list only 350 homes per week and it will even shrink in the next weeks.
$OPEN call much better than numbers and forecast. Probably the reason why it didn't crash yet. Let's just hope they can implement all that. As Kaz was a master of broken promises this year...
$OPEN oh my. Worse than I thought. Revenue about the same in Q4 as in Q3 (40% growth yoy, which is shit) and EBITDA loss of 70-85m in Q4 after 31m in Q3. This implies a negative contribution margin of -1%. Holy moly that's even worse than my worse fears. 馃挃