Opendoor Technologies Inc. (OPEN): A Bear Case Theory 

We came across a bearish thesis on Opendoor Technologies Inc. on Buffetts Disciple’s Substack by Aled. In this article, we will summarize the bears’ thesis on OPEN. Opendoor Technologies Inc.’s share was trading at $5.76 as of January 28th.

Opendoor Technologies Inc. (Opendoor) is a tech-enabled real estate company that aims to simplify the home buying and selling process, but its business model faces severe structural challenges. Founded to offer sellers a faster, less stressful alternative to traditional real estate transactions, Opendoor purchases homes directly and resells them after renovations, while also providing ancillary services like mortgage lending, title and escrow services, and moving assistance. However, the economics of its house-flipping model are fundamentally flawed.

On average, Opendoor loses around $25,000 per home even before accounting for marketing, repairs, insurance, and other operating costs, leaving only razor-thin margins that make scaling national operations extremely risky. Despite efforts to focus on higher-margin flips, the company has never achieved GAAP profitability, posting a $1.3 billion loss in 2022, and its current leadership lacks deep real estate expertise, further jeopardizing operational execution. CEO Kaz Nejatian has underestimated the complexity of real estate, conflating home flipping with simpler, more standardized asset classes, and his strategic direction shows no coherent long-term plan.

Macroeconomic volatility, particularly interest rate fluctuations, could easily exacerbate losses, and Opendoor’s heavy marketing and acquisition costs continue to erode potential profits. While theoretically the company could pivot to a marketplace model, avoiding the risk of owning homes and competing with MLS, this would require an extremely challenging execution shift.

Given its persistent unprofitability, capital-intensive operations, and leadership missteps, Opendoor appears structurally unviable. Investors face high downside risk, and without a radical change in strategy, the company is likely on a path toward continued losses and potential bankruptcy, making its current valuation unjustified and speculative.

Previously, we covered a bullish thesis on Opendoor Technologies Inc. (OPEN) by LongYield in May 2025, which highlighted the company’s strategic shift to a broader selling options platform, improved operational efficiency, and steps toward profitability. OPEN’s stock price has appreciated by approximately 560.55% since our coverage due to optimism around its path to positive adjusted EBITDA. Aled shares a contrarian view but emphasizes structural flaws, persistent losses, and leadership risks, arguing the company remains at high risk of continued financial stress.

Opendoor Technologies Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held OPEN at the end of the third quarter which was 21 in the previous quarter. While we acknowledge the risk and potential of OPEN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than OPEN and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.