Opendoor loses $400M as home sales tank

Opendoor closed out 2022 with two straight quarters of losses, tanked by its sinking homebuying business. 

The iBuyer posted a net loss of $399 million in the fourth quarter, according its earnings call this week. The company made $2.9 billion in revenue last quarter, down 25 percent year-over-year. 

Opendoor sold slightly more than 7,500 homes last quarter — a 23 percent decline from the fourth quarter of 2021, when the company made an average profit of $16,000 on each home sold. In the most recent quarter, the company took an average hit of $28,000 per home.

The company doubled its losses from the previous year to $1.4 billion net loss for 2022. 

iBuyers were among the residential players hit hard by the market’s stark change halfway through 2022 as mortgage rates surged to near double their levels from 12 months earlier. Chief executive officer Carrie Wheeler, who replaced founder Eric Wu after the company reported $928 million net loss in the third quarter, said in a letter to shareholders the company sized the losses in relation to the market’s correction in the second half of the year. 

After its acquisition pace surpassed $20 billion in the easy waters seen in the first half of 2022, the company said it slowed buying and cut listing prices, but not “quickly or aggressively enough.”

The company said it would prioritize selling the homes it acquired between March and June, almost 70 percent of which it had sold by the end of 2022. It said in the shareholder letter its expects to sell over 85% of the cohort by the end of the first quarter. 

The stock closed at $1.82 on Thursday, staying clear of the $1 threshold it dipped below in December, threatening its status on the stock market.

Opendoor’s market cap was slightly above $1 billion at the close of the market on Thursday. At its peak ahead of its 2020 IPO, the company’s market cap was roughly $18 billion.

— Holden Walter-Warner