Opendoor Attacked By Short Seller—Stock Pops Anyway

Core Viewpoint - Citron Research, led by Andrew Left, criticized Opendoor Technologies, labeling it a "stock promo and a science project in how to burn money," while expressing a more favorable view on loanDepot, Inc. [1][2] Company Analysis - Citron Research argues that Opendoor's business model has never been successful, stating, "The business model is not broken….it has never worked" [2]. - Despite the criticism, Opendoor's stock initially dipped but quickly rebounded, indicating investor resilience [2]. - Opendoor shares experienced a significant increase of over 8% on heavy trading volume, with a remarkable rise of more than 420% over the past six months [3][4]. Market Reaction - Following Citron's comments, loanDepot shares also saw a rally, as the market is perceived to undervalue its mortgage servicing division, which Citron valued at $5 per share, more than double its recent trading price [3][4]. Financial Concerns - Citron highlighted several risks associated with Opendoor's business, including: - Inability to leverage AI for margin scaling or market defense [5]. - Low margins in the housing sector, where a 1-2% swing can eliminate profits [5]. - Significant capital requirements, with billions tied up in inventory and no guaranteed resale [5]. - Competition from Zillow, which previously attempted and failed with a similar model [5]. - Anticipation of massive dilution due to ongoing cash burn [5].