Opendoor's stock surges 189% after hedge fund manager Eric Jackson backs the company.

Eric Jackson, a hedge fund manager, has taken a position in Opendoor, the online real estate service, and believes the stock could be a 100-bagger over the next few years. His firm, EMJ Capital, purchased Opendoor shares when the stock was in the 70s and 80s and has also bought options. The stock soared 189% this week, closing at $2.25. Jackson's online influence and following have contributed to the stock's dramatic rise, despite no fundamental changes in the company.

Opendoor Technologies (OPEN) stock has seen a remarkable surge in recent weeks, rising by another 10.8% on Thursday to bring its one-month gains to nearly 200%. The stock's dramatic ascent is largely driven by retail enthusiasm and a bullish thesis from investor Eric Jackson, president and founder of tech-focused long/short investing hedge fund EMJ Capital.

Jackson, who was also early to call for a turnaround at Carvana (CVNA), posted a thread on July 14 outlining his Opendoor thesis, citing several tailwinds and concluding that the stock could potentially be a 100-bagger over the next few years. Since his comments, the stock has roughly doubled, closing at $1.65 on Thursday [1].

The stock's recent performance has been further fueled by retail traders who have piled into the trade. In the past 24 hours, at least a dozen posts citing bullish options plays on Opendoor were posted to the r/WallStreetBets Reddit page, garnering over 2,000 comments [2].

Jackson's thesis is that Opendoor faces no true competition now that Zillow and Redfin have exited the iBuyer game. iBuyer technology uses algorithms to help companies buy homes from owners for cash, make light repairs, then flip them back onto the open market to hopefully resell at a profit. The strategy once had buy-in from some of the real estate industry's biggest names, but real estate giants Zillow (Z) and Redfin announced in 2021 and 2022, respectively, that they were getting out of the iBuyer space and returning to their core offerings [1].

Jackson sees Opendoor as similar to a bet on Coinbase (COIN) before the collapse of FTX. Coinbase stock closed at around $34 in early 2023 and now trades north of $400 [1].

When Opendoor reports earnings on Aug. 5, Jackson predicts the company will show its first quarter of positive EBITDA. He also agrees with analyst consensus estimates that Opendoor is likely to print revenue of $11.6 billion in FY 2029. In fiscal 2024, Opendoor's revenue tallied $5.2 billion [1].

Offerpad Solutions (OPAD), often cited as Opendoor's biggest competitor in the iBuyer space, has also seen its shares surge recently. However, Jackson told Yahoo Finance that Offerpad lacks the scale to compete nationally in the long term with Opendoor. Instead, he sees Opendoor as likely to be the dominant player in iBuying over the long run [1].

Jackson's influence and following have contributed to the stock's dramatic rise, despite no fundamental changes in the company. The stock soared 189% this week, closing at $2.25 [3].

References:
[1] https://finance.yahoo.com/news/opendoor-stock-explodes-higher-as-retail-piles-in-hedge-funder-sees-potential-100x-rally-in-next-few-years-181007702.html
[2] https://finance.yahoo.com/news/opendoor-stock-jumps-another-10-as-retail-piles-in-on-potential-100x-rally-in-next-few-years-202539566.html
[3] https://finance.yahoo.com/news/why-eth-going-10-000-155255477.html