Amazon vs. Opendoor Technologies: Which Stock is the Better Buy?

Opendoor Technologies' stock has surged 500% in under a month after a hedge fund manager announced an investment, setting an $82 price target. The company has struggled in a slow housing market, but some see potential in its cost-cutting measures, pivot to partnering with agents, and lack of direct competitors. Amazon, on the other hand, is a safer stock with proven e-commerce success and a lucrative cloud unit, but its massive market capitalization limits its upside potential.

Opendoor Technologies' stock has surged by over 500% in less than a month, following a hedge fund manager's investment announcement and an $82 price target [1]. The company, which operates in the real estate e-commerce space, has struggled in a slow housing market, but recent cost-cutting measures, a pivot to partnering with agents, and a lack of direct competitors have sparked renewed interest.

The housing market's slowdown, coupled with rising mortgage rates, has posed significant challenges for Opendoor. The company's iBuying model, which involves purchasing and reselling homes online, has struggled to generate consistent profits. However, hedge fund manager Eric Jackson of EMJ Capital believes that Opendoor's cost-cutting efforts and strategic shifts could lead to a significant turnaround, setting an ambitious $82 price target [1].

In contrast, Amazon (NASDAQ: AMZN) offers a safer investment with proven e-commerce success and a lucrative cloud unit, Amazon Web Services (AWS). While Amazon's massive market capitalization limits its upside potential, it is still expected to grow earnings by an average of 21% annually over the next three to five years [1].

The recent surge in Opendoor's stock price has been driven by a combination of activist investor commentary, retail hype, and the potential for a short squeeze. However, the company's business model remains fundamentally challenged, and its reliance on debt financing is a significant risk [2]. The company's recent Q1 2025 revenue of $1.2 billion, while a positive sign, is still far from profitability. Opendoor projects positive Adjusted EBITDA for Q2 2025, but this is largely driven by cost-cutting measures and a strategic shift toward agent partnerships rather than direct home purchases [2].

Investors considering Opendoor as a speculative play should understand the risks. The company's stock is still down 97% from its peak and faces significant headwinds, including declining home affordability, rising interest rates, and regulatory scrutiny. While a short squeeze could temporarily boost the stock price, this doesn't change the underlying fundamentals [2].

References:
[1] https://finance.yahoo.com/news/best-stock-buy-now-amazon-082700411.html
[2] https://www.ainvest.com/news/opendoor-s-valuation-and-business-model-risks-next-meme-stock-or-a-cautionary-tale-250710104d5e39ef96b58efe/