What Happened?
Shares of technology real estate company Opendoor (NASDAQ: OPEN) jumped 9% in the afternoon session after the company continued its rally, fueled by strong retail investor interest and an insider stock purchase, while shrugging off a negative report from a short-seller.
The stock, which has gained "meme" and "cult stock" status, has been heavily championed by investor Eric Jackson of EMJ Capital. This surge in interest from individual traders is intensified by significant short interest, with nearly a quarter of Opendoor's publicly available shares being bet against by traders, creating volatile price swings. Adding to the positive sentiment, the company's new interim president, Shrisha Radhakrishna, recently purchased 30,000 shares, a move often interpreted as a sign of confidence. The rally persisted even after famed short-seller Citron Research issued a bearish report, calling the company a "science project in how to burn money." Investors largely brushed off the criticism, with the stock rebounding quickly after an initial dip.
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What Is The Market Telling Us
Opendoor’s shares are extremely volatile and have had 92 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 6.9% after buying from retail investors and a high level of short interest, creating volatility. The real estate platform has become a favorite among individual traders, who recently poured approximately $97 million into the stock, according to a JP Morgan report. This intense retail interest comes as institutional investors have largely stayed on the sidelines.
The stock also has significant short interest, with nearly a quarter of its publicly available shares being bet against by traders. This dynamic can lead to a "short squeeze," where heavy buying pressure forces short-sellers to buy back shares, further driving up the price. While the stock is up nearly 180% year-to-date amid optimism about a stabilizing housing market, conflicting signals exist.
Opendoor is up 329% since the beginning of the year, and at $6.82 per share, has set a new 52-week high. Investors who bought $1,000 worth of Opendoor’s shares 5 years ago would now be looking at an investment worth $567.92.
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