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Investing.com - Citizens JMP downgraded Opendoor Technologies (NASDAQ:OPEN) from Market Outperform to Market Perform on Friday. The company, currently trading at $0.57 with a market capitalization of $415 million, has seen its stock decline over 71% in the past year.
The downgrade comes as the investment firm sees Opendoor increasingly serving as a "backstop" for home sellers rather than as their primary sales channel. According to InvestingPro analysis, the company operates with a concerning debt-to-equity ratio of 3.92x and faces challenges in making interest payments on its debt.
Citizens JMP noted that Opendoor’s agent business remains in early stages but has potential to transition the company toward a higher mix of capital-light and high-margin revenue streams.
Despite the downgrade, the firm acknowledged that Opendoor’s iBuying product remains differentiated and could strategically unlock adjacent business opportunities as the company navigates the current challenging macro environment.
Citizens JMP indicated it would reconsider its rating upon seeing "an inflection in either macro or its agent business" that could warrant a more positive outlook on the real estate technology company.
In other recent news, Opendoor Technologies reported its first-quarter 2025 financial results, surpassing Wall Street’s earnings expectations. The company posted an earnings per share of -$0.12, slightly better than the forecasted -$0.13, with revenue reaching $1.2 billion, exceeding the anticipated $1.07 billion. Additionally, Opendoor announced a proposal for a reverse stock split to maintain its Nasdaq listing, with ratios ranging from 1-for-10 to 1-for-50, which will be determined by the Board. This move is aimed at enhancing long-term shareholder value and ensuring compliance with Nasdaq’s requirements. In another development, Opendoor entered into agreements for the issuance of $325 million in new convertible senior notes due 2030, replacing approximately $245.8 million of existing notes due 2026. Citi analysts recently lowered their price target for Opendoor to $0.80 from $1.40, maintaining a Neutral rating, citing challenges in the housing market. Despite this, Opendoor’s profitability metrics for the second quarter are forecasted to surpass expectations, indicating a strategic shift towards improving its contribution margin. These developments reflect Opendoor’s ongoing efforts to navigate a challenging real estate market while focusing on profitability and strategic growth.
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