Opendoor Technologies is seeing the market test its latest strategy shift as Q2 results show a sharp drop in revenue. With $883 million in revenue, the digital home-buying company’s sales have shrunk by nearly half since the same period last year, when revenue stood at $1.57 billion. This drop was compounded by a slump in home sales, with 2,339 homes sold in the quarter compared to 4,299 in the second quarter of 2022.
The adjusted EBITDA, a proxy for operational health, swung from a $23 million profit a year ago to a $4 million loss this quarter. The company’s leadership has attributed this shift to a prior decision to scale back inventory, a move that left fewer homes available for sale.
New leadership now aims to correct course. In Q2, Opendoor added 4,378 homes to inventory, more than double the 1,757 it bought in the second quarter of 2022. The company also signed 6,908 contracts to purchase more homes, the highest number since 2022. While CEO Kaz Nejatian claims the company is "now on a clear path to sustained ANI profitability," the company still has never recorded a GAAP profit. That history casts doubt on the sustainability of any future gains.
Investor sentiment appears cautious. Despite the company's efforts to scale up its inventory, the stock fell 8.5% on Wednesday, while the broader Nasdaq Composite lost 0.9%. The S&P 500, by contrast, only dipped 0.2%. Given the recent rise in market uncertainty and potential rate hikes on the horizon, the company faces an uphill battle to convince traders of its long-term viability.