Bull markets and low interest rates can make the stock market irrational. Anyone who has been following stocks for the past five years knows this all too well, with pre-revenue "businesses" routinely getting multibillion-dollar valuations. There were 613 special purpose acquisition companies (SPACs) that went public just in 2021 -- almost two per day! Most of these stocks have lost shareholders' money and are significantly underperforming the market.
Opendoor Technologies (NASDAQ: OPEN) went public via a SPAC in 2020. The real estate start-up pitched itself as a technology company, but all it was doing was buying and selling residential real estate directly from consumers, otherwise known as home flipping. That's not exactly a revolutionary new technology. Now, with the housing market stagnating after mortgage rates doubled over the past year, the cracks are continuing to widen on Opendoor's financial statements.
Opendoor's business model looks broken. Can the company fix it?
Source Fool.com