Shares of digital real estate platform Opendoor are extending their impressive rebound, climbing an additional 3% in premarket trading following Monday’s explosive 21.5% surge. This dramatic reversal comes after disappointing recent earnings and stems directly from management’s aggressive campaign against short sellers.
Management Demonstrates Unwavering Confidence
CEO Kaz Nejatian is putting his money where his mouth is, announcing plans to personally purchase $1 million worth of Opendoor stock. This substantial private investment represents an extraordinary display of executive conviction in the company’s turnaround strategy.
During the earnings discussion, Nejatian also expressed support for former President Trump’s proposed 50-year mortgage initiative, suggesting it could provide significant tailwinds for both the housing market and Opendoor’s business model.
Warrants Weaponized Against Short Positions
The centerpiece of Opendoor’s offensive against bearish investors is a special dividend distribution of tradable warrants. Shareholders of record by November 18 will receive three transferable warrants for every thirty shares held, featuring strike prices of $9, $13, and $17 with expiration dates in November 2026.
Nejatian left no ambiguity about the tactic’s purpose during the earnings call, stating this maneuver would “completely ruin the night for some short sellers.” The strategy imposes substantial burdens on short sellers by forcing them to deliver warrants to the original stock lenders—a complex and expensive process that could trigger position closures.
Should investors sell immediately? Or is it worth buying Opendoor?
Elevated Short Interest Creates Squeeze Conditions
With short interest exceeding 20% of available float, Opendoor presents ideal conditions for a potential short squeeze. The warrant dividend substantially intensifies pressure on bearish positions through multiple channels:
• Mandatory warrant purchase and delivery requirements
• Significantly elevated costs for maintaining short positions
• Sharply increased risk of forced covering
• Complex logistics that may deter new short establishment
Operational Performance Shows Mixed Signals
Third-quarter operational results presented a nuanced picture. Revenue declined 34% to $915 million, yet surpassed expectations by 3.7%. The number of homes sold dropped 29% to 2,568 units, while gross profit of $66 million exceeded projections—despite a widening adjusted EBITDA loss of $33 million.
Management’s fourth-quarter guidance anticipates sequential acquisition growth of at least 35%, though warns of approximately 35% revenue decline due to constrained inventory levels.
Market Dynamics Reflect Extreme Volatility
Currently trading as one of the market’s most volatile securities, Opendoor shares regularly experience daily price swings exceeding 20%. The stock has advanced roughly 400% year-to-date, driven primarily by retail investor momentum rather than fundamental operational improvements.
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