Eric Wu, Founder and CEO of Opendoor, a startup returning home, at their San Francisco headquarters on May 18, 2017.
Christie There Clock | New York Times
One week after Zillow announced its sudden exit from the home buying market, rival Opendoor reported third-quarter results that topped estimates and issued an optimistic forecast for the rest of the year, sending the stock soaring in expanded trading.
Opendoor jumped 1[ads1]6% after hours to $ 22.48. Before the rally after the market, the share was down 1% for the year.
Revenue for the quarter rose to $ 2.27 billion from $ 338.6 million the year before, when the Covid-19 pandemic put a temporary halt to transactions. Revenue increased 91% from the second quarter, exceeding the average analyst estimate of $ 2.01 billion, according to Refinitiv.
Opendoor was founded in 2014 and was a pioneer in instant buying, or iBuying, the home market by letting homeowners sell their home for cash without listing it on the market and handling a lengthy bidding and closing process. The company was listed on the stock exchange in December through an acquisition company for special purposes.
Zillow began testing the iBuying market in 2017 and jumped in two years later, when it began buying and selling in Southern California. The business initially operated, but suffered major setbacks this year when massive fluctuations in house prices undermined Zillow’s predictive models and ultimately caused the company to spend more on properties than it could profit from selling them.
Zillow shares fell 25% after the announced departure from the market last week, and the company said it eliminates a quarter of the workforce. The stock has lost over two-thirds of its value since peaking in mid-February.
OpenDoor is disrupting the real estate market with its new model. It buys homes and sells them on its platform.
In an interview after Opendoor’s report on Wednesday, CFO Carrie Wheeler said that the company has built its technology to ensure that it can cope through unpredictable market events.
“We’re very good at pricing,” Wheeler said. “We’ve been doing it for seven years. That’s the core of what we do. We’re focused on data.”
In addition to exceeding revenue estimates, Opendoor’s loss of 9 cents per share was below the loss of 17 cents analysts expected. And for the fourth quarter, Opendoor predicted revenue of $ 3.1 billion to $ 3.2 billion, which tops the average analyst estimate of $ 2.92 billion, according to Refinitv.
Opendoor sold 5,988 houses during the period, up 72% from the second quarter, and it bought 15,181 homes, which was up 79% from the previous period.
“We went out of our way for the bulk of our guidance, primarily due to unit volumes driven by strong growth in home purchases and the overall strength of demand for homes, which led to a faster-than-expected resale rate,” Wheeler said in the results call. after the report.
SEE: Zillow’s CEO about getting out of home flipping