This is the best DD article I have ever read...Thank you. I own OPEN, Z and RDFN. The only thing that worried me about OPEN was choosing to go the SPAC route. Of all the decks I have of companies choosing the SPAC financing, the insiders get rich on the front end at the expense of the market. Honestly, I have not read the prospectus on OPEN, I am only making assumptions based personal bias. Though financial variables will shift, this middleman model needs to be gutted because it is costly and time consuming. This is AMZN style disruption. Personally, I would take a 10% hit on the price of my house JUST to move it quickly.
This is excellent. I guess your $6.0 mm in incremental interest = 300K * 20% equity * 10,000 per quarter; actually not sure I understand how you got incremental interest from the equity ... but I think the bigger question (surprised I haven't seen this, I will take a look at their 10K) is their overall return on capital. If I see their ROC (e.g., EVA) is durable, then I think it's a buy for me. This is a capital intensive business so I think that's the piece this missing in the argument. But THANK YOU for OPENing my eyes to OPEN, great job here. I will be reading this twice.
Thank you Doctor! This is a fun reading against a humorously-serious and forward-looking mind of a logical writer. After I read your analysis and look at what is happening around our life, I am asking myself one question: which industry can escape digitalization? My answer is NONE. If not this OpenDoor, I believe there must be another "door open" for carrying out digital transformation for real estate. I am hoping Eric Wu's team would take a look at your article and make OpenDoor an Amazon-grade company where "buy & Sell books" is just the beginning. OpenDoor needs to create its own "AWS" around people's living space to truly take off...
Excellence is rare and I found it here. Kudos, Tyler. Listen, I've been diligently looking the other way into macro for 4 decades (I'm naturally a big picture guy) and if I'm correct (and I am, just can't know the timing when you know the what, as quantum physics points out) we are collectively just now heading into a complete 'reset' of the whole global economic/financial system. An 'Exponential Vortex' of epic (Prometheus) proportions. It would not be an overstatement to possibly say even 'Biblical'. Remember what mom and dad advised "Look both ways" before crossing. One has to get both right. Flywheel! And what I see is all roads lead to physical GOLD. The current system is founded on debt based fiat, which is currently experiencing its 'end game' (massive printing MMT). As a doctor you will appreciate this analogy. It's exactly like the system is a patient on life support (free copter money drugs) now totally dependant, and forget 'normalization/taper/raise rates', there will be no getting off the machines. And any hint that the drug supply will be even reduced will send the patient into convulsions, requiring ever moooore drugs, until expiry. (hyper stagflation collapse/death). On 'the other side', it will be the necessity of financial Trust which will in shortest supply and highest demand, and only Gold will have it. (why all major CB's hold it in reserve on BS). So my advise is to be your own CB and hold your savings in physical Gold in your personal possession. Everything, including all your fav equities will be on massive sale and only available to those who possess liquidity with real value outside the destroyed debt based fiat system. I'm ready and willing to answer any questions you or others may have on the subject. I personally intend to be transforming some of my Gold into OPEN/PLTR/SOFI/SNOW/U/S/NETUPST/MQ/ELO/ESK/NFG/PANW/ARVN/PATH
Absolutely Incredible! Throughly enjoyed every aspect of your analysis of OPEN from the start with the Prometheus references to the Connor McGregor power phrase which made me laugh! Awesome content! I just subscribed 🤝
I do not see any economic gain for the seller--still paying 7% and probably getting less than the market price. Since they don't pay a realtor any commision, why are they charging so much? I would not use them.
Great stuff man. Your best yet. Thoughts on RKT in the space? I think they are underrated and poised with a pretty good wedge (mortgages), NPS, culture, tech, and flywheel of their own. OPEN is my numero uno though. I also find DOMA pretty attractive from an investment standpoint. It's happening (disruption of this antiquated model)....
I had OPEN at 20$, and I averaged buying 200 stocks to 14.5$. I already believed a lot in this company, but being european was not so easy to investigate deeply american housing market...cheese, what a report. Congrats!
My only doubt are about the possible reduction of the FED's balance sheet. How much would that affect Opendoor? let's see. I still belive in it a lot.
Opendoor works ok until a downturn hits. In Q2 they made $900 in profit for every home sold. This was at the peak of bidding wars.
Would you risk $300k for that return? Opendoor charges 5% plus 1% in closing costs, compared to 6% traditional realtor plus closing costs (about 1%). A 1% operating margin (not profit) is nothing to get excited about.
Tyler, you said Opendoor isn't understood by the market, but it's easily understood. Using Opendoor's website is literally a current look at the company's prospects. Opendoor only works in a rapidly appreciating environment. Right now, Opendoor owns 1,600+ homes in Texas, about a third have been on the market for more than a month (similar in all their markets). The 1% margin is long gone. Each home they put on the market increases supply and hurts them. They're a victim of their own success (they tried creating a monopoly).
There's no growth excuse either. Once someone sells to Opendoor, there's no market share gain for Opendoor. It's like selling your car to CarMax, it's one and done. 20 years from now someone might consider Opendoor when they sell again, but there's no competitive advantage for Opendoor. The exact opposite happened with Amazon: market share, free delivery, Costco style membership fee, all led to the richest man in the world.
Opendoor isn't getting rid of middlemen, they're just trying to replace them.
Tyler, you mentioned Opendoor paid 107% of asking. Look at their site - the bidding wars are gone. Zillow is doing price cuts on their Zillow Homes owned properties every week. They're going to hemorrhage money.
Opendoor will stumble along like most zombie companies, but it's no game changer.
This is the best DD article I have ever read...Thank you. I own OPEN, Z and RDFN. The only thing that worried me about OPEN was choosing to go the SPAC route. Of all the decks I have of companies choosing the SPAC financing, the insiders get rich on the front end at the expense of the market. Honestly, I have not read the prospectus on OPEN, I am only making assumptions based personal bias. Though financial variables will shift, this middleman model needs to be gutted because it is costly and time consuming. This is AMZN style disruption. Personally, I would take a 10% hit on the price of my house JUST to move it quickly.
This is excellent. I guess your $6.0 mm in incremental interest = 300K * 20% equity * 10,000 per quarter; actually not sure I understand how you got incremental interest from the equity ... but I think the bigger question (surprised I haven't seen this, I will take a look at their 10K) is their overall return on capital. If I see their ROC (e.g., EVA) is durable, then I think it's a buy for me. This is a capital intensive business so I think that's the piece this missing in the argument. But THANK YOU for OPENing my eyes to OPEN, great job here. I will be reading this twice.
Thank you Doctor! This is a fun reading against a humorously-serious and forward-looking mind of a logical writer. After I read your analysis and look at what is happening around our life, I am asking myself one question: which industry can escape digitalization? My answer is NONE. If not this OpenDoor, I believe there must be another "door open" for carrying out digital transformation for real estate. I am hoping Eric Wu's team would take a look at your article and make OpenDoor an Amazon-grade company where "buy & Sell books" is just the beginning. OpenDoor needs to create its own "AWS" around people's living space to truly take off...
Big day today.
Excellence is rare and I found it here. Kudos, Tyler. Listen, I've been diligently looking the other way into macro for 4 decades (I'm naturally a big picture guy) and if I'm correct (and I am, just can't know the timing when you know the what, as quantum physics points out) we are collectively just now heading into a complete 'reset' of the whole global economic/financial system. An 'Exponential Vortex' of epic (Prometheus) proportions. It would not be an overstatement to possibly say even 'Biblical'. Remember what mom and dad advised "Look both ways" before crossing. One has to get both right. Flywheel! And what I see is all roads lead to physical GOLD. The current system is founded on debt based fiat, which is currently experiencing its 'end game' (massive printing MMT). As a doctor you will appreciate this analogy. It's exactly like the system is a patient on life support (free copter money drugs) now totally dependant, and forget 'normalization/taper/raise rates', there will be no getting off the machines. And any hint that the drug supply will be even reduced will send the patient into convulsions, requiring ever moooore drugs, until expiry. (hyper stagflation collapse/death). On 'the other side', it will be the necessity of financial Trust which will in shortest supply and highest demand, and only Gold will have it. (why all major CB's hold it in reserve on BS). So my advise is to be your own CB and hold your savings in physical Gold in your personal possession. Everything, including all your fav equities will be on massive sale and only available to those who possess liquidity with real value outside the destroyed debt based fiat system. I'm ready and willing to answer any questions you or others may have on the subject. I personally intend to be transforming some of my Gold into OPEN/PLTR/SOFI/SNOW/U/S/NETUPST/MQ/ELO/ESK/NFG/PANW/ARVN/PATH
I like you great analysis. Long but worth reading.
Absolutely Incredible! Throughly enjoyed every aspect of your analysis of OPEN from the start with the Prometheus references to the Connor McGregor power phrase which made me laugh! Awesome content! I just subscribed 🤝
Holy sweet innocent baby jesus what a read. I mean, my friggin god. Bartender, I’ll have another please.
I do not see any economic gain for the seller--still paying 7% and probably getting less than the market price. Since they don't pay a realtor any commision, why are they charging so much? I would not use them.
Great stuff man. Your best yet. Thoughts on RKT in the space? I think they are underrated and poised with a pretty good wedge (mortgages), NPS, culture, tech, and flywheel of their own. OPEN is my numero uno though. I also find DOMA pretty attractive from an investment standpoint. It's happening (disruption of this antiquated model)....
Hello Tyler.
I had OPEN at 20$, and I averaged buying 200 stocks to 14.5$. I already believed a lot in this company, but being european was not so easy to investigate deeply american housing market...cheese, what a report. Congrats!
My only doubt are about the possible reduction of the FED's balance sheet. How much would that affect Opendoor? let's see. I still belive in it a lot.
Take care and thank you!
Here is some cold water for you.
https://homefeed.medium.com/the-delusion-behind-opendoors-virtuous-cycle-a57222fef6de
Opendoor works ok until a downturn hits. In Q2 they made $900 in profit for every home sold. This was at the peak of bidding wars.
Would you risk $300k for that return? Opendoor charges 5% plus 1% in closing costs, compared to 6% traditional realtor plus closing costs (about 1%). A 1% operating margin (not profit) is nothing to get excited about.
Tyler, you said Opendoor isn't understood by the market, but it's easily understood. Using Opendoor's website is literally a current look at the company's prospects. Opendoor only works in a rapidly appreciating environment. Right now, Opendoor owns 1,600+ homes in Texas, about a third have been on the market for more than a month (similar in all their markets). The 1% margin is long gone. Each home they put on the market increases supply and hurts them. They're a victim of their own success (they tried creating a monopoly).
There's no growth excuse either. Once someone sells to Opendoor, there's no market share gain for Opendoor. It's like selling your car to CarMax, it's one and done. 20 years from now someone might consider Opendoor when they sell again, but there's no competitive advantage for Opendoor. The exact opposite happened with Amazon: market share, free delivery, Costco style membership fee, all led to the richest man in the world.
Opendoor isn't getting rid of middlemen, they're just trying to replace them.
Tyler, you mentioned Opendoor paid 107% of asking. Look at their site - the bidding wars are gone. Zillow is doing price cuts on their Zillow Homes owned properties every week. They're going to hemorrhage money.
Opendoor will stumble along like most zombie companies, but it's no game changer.