Opendoor Technologies Inc. witnessed a dramatic after-hours selloff on Friday, with its shares plunging as much as 14.8% following a disappointing third-quarter earnings report. The property platform’s weak financial performance coincided with a surprising strategic pivot announced by its newly appointed CEO, who revealed plans to transform the company from a residential transaction business into an artificial intelligence and software enterprise.
Leadership Announces Fundamental Business Shift
The company’s new chief executive, Kaz Nejatian, who assumed leadership in September, declared a radical departure from Opendoor’s original business model. “We are fundamentally repositioning Opendoor as an AI and software company,” Nejatian stated, characterizing the move as a “decisive break from the past” intended to reduce the company’s exposure to real estate market cycles.
This strategic transformation will be accompanied by several significant corporate actions:
– Issuance of over 180 million new shares priced at $6.56 each
– Repurchase of convertible notes valued at $264 million
– Elimination of external consulting relationships
– Substantial investment allocations toward AI product development
Quarterly Financial Performance Disappoints
Investors reacted negatively to third-quarter results that fell substantially short of expectations. The company reported a loss of $90 million, far exceeding projections, with a per-share loss of -$0.12 compared to the -$0.07 forecast by market analysts.
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Revenue figures also disappointed, coming in at $915 million against expectations of $922.05 million. More concerning was the dramatic compression in gross profit, which collapsed to $66 million from $105 million in the same quarter last year. The company’s transaction volume reflected this downturn, declining nearly 30% from 3,615 homes sold in the previous year’s quarter to just 2,568 properties in the most recent period.
Management Maintains Long-term Optimism
Despite current challenges, company executives expressed confidence in achieving adjusted net profitability by the end of 2026. For the upcoming fourth quarter, management anticipates increasing home purchases by at least 35% while simultaneously forecasting a revenue decline of approximately 35% due to constrained inventory levels.
The company projects its adjusted EBITDA loss for the fourth quarter will range between the high-$40 million and mid-$50 million figures. Market analysts remain largely skeptical of the company’s prospects, with most maintaining “Sell” or “Reduce” ratings on the stock following the announcements.
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