Opendoor Technologies (OPEN), mcap=$1.54bn, price $2.45 vs 4.53

$OPEN pitch:
– Opendoor – digital marketplace for buying and selling residential real estate.
– Has the potential to 10x over the medium term.
– Trades below 1x 2025 EV/EBITDA.
– Currently has a ~75% share of the iBuying industry – buying homes from private sellers to its balance sheet.
– iBuying penetration is set to grow from a very low single digits % of existing home sales to ~10% over the next decade.
– The company is expected to significantly improve unit economics through superior buying/selling and attaching high-margin incremental ancillary services to a transaction.
– Although OPEN has benefited from time arbitrage in a hot housing market during COVID, the business model should work in any housing market environment.

$OPEN Valuation:
– Set to generate ~$15B of revenue in 2022 and at a “mature” EBITDA margin of 5% the stock is trading at ~1x EBITDA.
– Trades at a significant discount to eCommerce and housing peers.

Exp. gain: 10x over medium term

Full OPEN write-up (free guest account required):

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