"Newly-minted meme stock Opendoor ( NASDAQ:OPEN) has seen incredible volatility this year, with shares of OPEN stock surging from a low of around $0.50 per share to as high as $10.87 per share (better than a 20-bagger for investors who timed this move right). Much of this has to do with the company's inclusion in the Roundhill Investments meme stock ETF, which resulted in interest in this name from retail investors surge."
"That said, I'd point investors to the company's most recent Q3 results, which showed continued weakness in fundamentals. Revenue declined 33% on a year-over-year basis this past quarter (dipping below $1 billion), with gross margins absolutely crashing from 37% to just 7.2%. That's a massive decline, and led to an even wider loss than most analysts and market participants were clearly hoping for, with Opendoor bringing in a loss of $90 million for the quarter."
Opendoor shares surged from roughly $0.50 to $10.87 this year following inclusion in the Roundhill Investments meme stock ETF and heightened retail interest. The company exhibits typical meme-stock traits, including a low float and low share price that make options cheaper. Recent performance has reversed sharply with about a 40% decline from a peak as fundamentals weakened. Q3 revenue fell 33% year over year to below $1 billion, gross margins collapsed from 37% to 7.2%, and the company reported a $90 million quarterly loss. The combination of weak operations and market volatility increases downside risk.
Read at 24/7 Wall St.
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