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The post Opendoor Stock Soars on Q2 Earnings appeared first on Millennial Money.
Shares of Opendoor Technologies (NASDAQ: OPEN) have soared on Thursday, up by 18% as of 12:30 p.m. EDT, after the company reported strong second quarter earnings.
The iBuying specialist continues to benefit from the housing boom, scooping up a record number of homes during the quarter.
Here’s what investors need to know.
Riding the housing boom
Revenue in the second quarter was $1.2 billion, bringing in $159 million of gross profit. Adjusted EBITDA came in at $26 million, with a contribution profit of $128 million.
Opendoor bought a record 8,494 homes and sold 3,481 homes during the quarter, bringing its total inventory to 7,971 at the end of the quarter. Those properties are worth an estimated $2.7 billion. Opendoor also had another 8,158 homes worth $3 billion under contract at the end of June. The company entered 12 new markets, bringing the total number of markets where it operates to 39.
The number of homes sold increased substantially from the first quarter, which Opendoor attributed to “ramping inventory levels and high transaction velocity in a supply-constrained market.”
| Quarter | Homes Sold |
| Q2 2021 | 3,481 |
| Q1 2021 | 2,462 |
| Q4 2020 | 849 |
| Q3 2020 | 1,232 |
| Q2 2020 | 2,924 |
Thanks to the strong momentum in the housing market, Opendoor is ahead of its projections. The company had merged with a special purpose acquisition company (SPAC), Chamath Palihapitiya’s Social Capital Hedosophia II, in late 2020. Many SPAC deals are criticized for including lofty forecasts, but Opendoor is actually delivering.
“Based on our current momentum, we are operating today at a second half revenue run rate that is on track to meet the 2023 target we provided at the time of our December listing,” CEO Eric Wu wrote in a letter to shareholders. The initial projection had called for $9.8 billion in revenue in 2023.
Opendoor’s overall liquidity position is also still strong, with $1.8 billion in cash on the balance sheet and borrowing capacity of $4.3 billion. “As we continue to outpace our prior growth projections, we’re well positioned to scale our borrowing capacity in support of rapid growth,” CFO Carrie Wheeler commented on the conference call with analysts.
The company recently completed the redemption of its outstanding warrants. Most of the derivatives were exercised on a cashless basis, which minimizes dilution as well as capital raised from issuing new shares. Total cash proceeds from the exercises were approximately $22.4 million.
After everything was said and done, Opendoor reported a net loss of $143.8 million, or $0.24 per share.
Growth is ahead of schedule
Guidance for the third quarter calls for revenue in the range of $1.8 billion to $1.9 billion, which should translate into adjusted EBITDA of $15 million to $25 million. Management expects home acquisitions and revenue growth to remain strong in the second half of the year.
“We’ve effectively pulled forward our financial plan by two years on both the top and bottom lines,” Wheeler added. The strong results show that Opendoor’s value proposition—offering consumers a streamlined transaction experience with lower fees—is resonating with consumers, according to the finance chief.
The post Opendoor Stock Soars on Q2 Earnings appeared first on Millennial Money.
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