Hedge fund manager George Noble criticized iBuying platform Opendoor Technologies Inc. OPEN, which has seen a monumental 1,776% rally since hitting an all-time low in late June.
The Business Model ‘Does Not Work’
In a post on X, Noble, who has founded two billion-dollar hedge funds and was an assistant to famed investor Peter Lynch, called Opendoor “total garbage,” while warning investors against believing in its long-term viability.
“The company has lost money every single year since its founding,” Noble said, adding that “the business model does not work and has atrocious unit economics.”
See Also: Opendoor Stock Rallies On Expansion And Short Squeeze Hopes
Noble argued that the cost-cutting measures that the company is currently in the midst of are unlikely to have any material impact on the company’s long-term trajectory. “Cost-cutting will not move the needle,” he said, while saying that investors can “go ahead and speculate,” but warns against pretending that “there is a fundamental case.”
The post also drew comparisons between Opendoor and its industry peer Compass Inc. COMP. Noble pointed out that while Opendoor trades at 22 times enterprise value to revenues, Compass is valued at just 0.9 times, maintains a “strong balance sheet,” and is profitable.
Noble further cautioned investors against being swayed by frenzies surrounding the stock. “Ignore the siren calls of the ‘ARMY’ and DYOR,” he wrote, using the acronym for “do your own research.”
Growing List of Naysayers
Opendoor shares have posted a strong rally in recent months, propelled by fund manager Eric Jackson, who has pegged a Price Target of $82 per share for the stock, which represents an upside of 756% from current levels. He has since upped his target to $500.
However, there is a growing list of prominent naysayers who are criticizing the stock’s rally, highlighting concerns similar to what Noble has in his post.
Investor Martin Shkreli, popularly known as “Pharma Bro,” recently announced a short position against the company, calling it an “obvious short,” while adding that he would be doing comprehensive due diligence on the company by calling employees, customers, competitors, and even the management.
Citron Research, led by famed short-seller Andrew Left, attacked the stock early this month, calling it “nothing more than a stock promo and a science project in how to burn money,” while pointing out several holes in the platform’s strategy and business model.
Opendoor shares were down 3.72% on Friday, ending the week at $9.57 per share, and are now down another 1.67% pre-market. The stock scores high on Momentum 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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