Shares of Opendoor Technologies Inc. OPEN have whipsawed over the past week, while hedge fund manager Eric Jackson, who ignited its rally, asks investors to keep calm.
Check out the current price of OPEN stock here.
What Happened: On Tuesday, in a post on X, Jackson reaffirmed his long-term target of $82 a share for the stock, which represents an upside of 3,900% from current levels.
In his post, Jackson laid out the valuation math behind his claims, pushing back against criticism that his projections were “too vague.”
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Jackson's model hinges on the forward enterprise value-to-revenue ratio, which he says is used for platforms like Carvana Co. CVNA and Uber Technologies Inc. UBER. “They're not profitable yet. EV/EBITDA is useless. It's all about revenues and looking forward, not back.”
He says that with this math, the target for Opendoor comes out to $31 now, the target that it would hit “hopefully” by December, while adding that “$82 by 2028 isn’t crazy.”
According to Jackson, in February 2021, Opendoor’s enterprise value was at 5.1 times its forward revenue. This ratio is now at 0.4x, and citing Bloomberg estimates that put its 2026 revenue at $5.75 billion and 2029 revenue at $12 billion, he says, “that math implies a fair value of $31 per share near-term and $82 longer term.”
Jackson acknowledged that next week's earnings call may not convince skeptics. “OPEN will likely be EBITDA positive. Bears will say it's a fluke.”
This comes as the stock witnessed a steep 12.39% decline on Tuesday, closing at $2.05 per share, after touching a high of $4.97 a week ago, and rallying 874% from its 52-week low of $0.51 last month.
To those concerned about the stock’s volatility, he says, “If it's too much volatility, don't buy this stock. Go trade GoPro or Kohl's or place a parlay bet on DraftKings tonight.” While asking investors to “#SitOnYourHands,” he says, “Rome wasn't built in a day. Neither were 100-baggers.”
Why It Matters: Jackson has repeatedly drawn parallels between Opendoor and Carvana, the stock that he had purchased at $21 a share, which is now up 1,502%. This has since earned him the name, “the Carvana hedge fund guy.”
There are, however, concerns that the U.S. housing markets could continue to worsen from here, creating headwinds for Opendoor.
Economist Matthew Martin said earlier this week that “The supply of existing homes for sale is approaching pre‑pandemic levels as a combination of high prices, elevated mortgage rates, and concerns over the labor market keep buyers sidelined,” which does not bode well for the company.
Price Action: Opendoor shares were down 12.39% on Tuesday, closing at $2.05 per share, and are down another 3.41% after hours.
Opendoor scores high on Momentum and Value in Benzinga’s Edge Stock Rankings, with a favorable price trend in the short, medium and long terms. Click here for deeper insights into the stock, its peers and competitors.
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