OpenDoor is an internet native real estate company that purchases homes directly from buyers and sells them on the market, all of which are handled natively through digital products. The company sold 18,799 homes in 2019, generating $4.7B in revenue.
While there are network effects that are benefiting OpenDoor (biggest dataset of home purchases, they have a huge network of subcontractors, and a lower cost of repairs) there are some things to watch out for.
- Opendoor projects a 47% year-over-year decline in revenue in 2020, due to COVID.
- During a recessionary environment, the company would have a lot of inventory on its balance sheet.
- The multiple of OpenDoor is much higher vs. competitors (Redfin, Zillow, etc)
- Competitors are launching competing products so expect margins to compress in an already challenging environment.
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