With billions saved — and misplaced — Opendoor resides by the creed “go huge or go residence.” But even after a dreary This fall, the iBuyer persists, which would be the greatest takeaway, Mike DelPrete writes solely for Intel.
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Final week Opendoor posted its This fall monetary outcomes, revealing mega losses alongside early indicators of a attainable turnaround.
Mike DelPrete
Why it issues: In 2022, Opendoor skilled a fully devastating take a look at of its enterprise mannequin – a worst case situation occasion – and survived.
Behind the numbers: Opendoor posted a internet lack of $1.4 billion in 2022, on prime of already sizable historic losses.
Opendoor, and lots of different venture-funded disruptors, are burning billions of {dollars} to develop new enterprise fashions – and the shortage of profitability simply doesn’t matter.
Probably the most noteworthy reality is that Opendoor misplaced $1.4 billion in 2022 and continues to be working (albeit with a brand new CEO).
Money is king: Manufactured monetary metrics apart, Opendoor has loads of (however not limitless) money reserves.
Opendoor ended 2022 with $1.3 billion in money, money equivalents, and marketable securities – down from $2.2 billion at first of the yr.
That’s a money burn of $934 million – huge losses, however a situation that Opendoor was in a position to climate with out elevating extra capital (or going bankrupt).
Like many firms, Opendoor is racing to chop its working bills as shortly as attainable.
In November, it laid off about 18 % of workers, and only in the near past introduced it had decreased its run-rate bills by roughly $110 million.
Working bills are trending considerably decrease – a optimistic signal for a corporation seeking to preserve money (notice: gross sales, advertising and marketing and operations flex up and down based mostly on the variety of residence gross sales).
Mike DelPrete
The focus upon which the way forward for the enterprise rests is when Opendoor will flip the nook and cease promoting properties for a loss.
Houses that Opendoor bought in Q3 and This fall are performing a lot better, with optimistic gross margins.
Sure, however: The primary properties to promote all the time have the perfect gross margins – over time, with value reductions, gross margins fall – as expertly illustrated by Datadoor.io.
Mike DelPrete
What to observe: Money, money, money – Opendoor’s future as a going concern rests on its means to fund loss-making operations.
With $1.3 billion within the financial institution and the worst behind it, the corporate seems to have loads of runway.
The underside line: Opendoor is taking part in a high-stakes sport of disruption.
With billions within the financial institution and billions in losses, the corporate resides by the creed “go huge or go residence.”
After experiencing its single largest problem in a difficult historical past, Opendoor persists – which would be the greatest takeaway from a brutal yr.
Mike DelPrete is a strategic adviser and world knowledgeable in actual property tech, together with zavvie, an iBuyer provide aggregator. Join with him on LinkedIn.
