Opendoor's Outlook Trimmed Sharply As Analyst Warns Of Widening Losses

Core Viewpoint - Opendoor Technologies' shares declined due to weaker-than-expected guidance and a shift to an agent-led sales model, raising concerns over losses and strategic direction despite a return to profitability last quarter [1][5]. Financial Performance - The company reported second-quarter revenue of $1.567 billion, a 4% increase year-over-year, surpassing the forecast of $1.516 billion, but contribution profit of $69 million fell short of the $73 million estimate [6]. - Management guided third-quarter revenue to be between $800 million and $875 million, significantly below the $1.039 billion projection [6]. - Adjusted EBITDA for the third quarter is expected to be a loss of $28 million to $21 million [6]. Analyst Ratings and Forecasts - Analyst Ryan Tomasello downgraded Opendoor's stock from Market Perform to Underperform, maintaining a price forecast of $1 [1][5]. - Revised financial forecasts indicate an adjusted EPS loss of 27 cents for 2025 and 22 cents for 2026, down from previous estimates of 21 cents and 14 cents, respectively [3]. - Adjusted EBITDA outlook for 2025 and 2026 has been lowered to losses of $72 million and $40 million, respectively, from earlier projections of a $44 million loss and a $30 million gain [4]. Strategic Direction - The management's guidance for second-half revenue is approximately 40% below consensus, indicating potential challenges ahead [5]. - The shift to an agent-led distribution model may lead to widening losses and strategic uncertainty, impacting share prices [5][7]. - A similar sequential revenue drop is expected in the fourth quarter due to a mix of older, lower-margin homes, delaying margin improvement until after 2025 [7].