This Growth Stock Is Down More Than 90%. Should You Buy It Hand Over Fist?
One of the worst-hit industries last year was real estate. With skyrocketing interest rates, fewer people could afford to buy a home. Naturally, all sorts of companies that sell products related to home buying have been negatively affected, some to the extreme. Opendoor Technologies (NASDAQ: OPEN) is in that boat. It's down 91% from its highs and trades at a dirt cheap valuation. But not all cheap stocks are bargains. Should you buy Opendoor stock right now?
Opendoor is an iBuyer, or a company that flips homes on its digital platform. It identifies homes for sale, makes an offer, fixes them up, and then resells them on its own marketplace. It provides bells and whistles such as video tours and quick cash offers to make for a competitive buying and selling experience, and it also has mortgages available on its platform.
As interest rates have increased, home sales have dived. There are a few different trends at work all related to each other: Mortgage rates are high, people have less money to spend, and because homebuyers aren't moving, there are fewer houses on the market for resale. Opendoor's revenue fell by half in the 2023 third quarter, continuing a downward trajectory.
Source Fool.com
