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Tuesday, Offerpad Solutions Inc. (NYSE:OPAD) shares dropped approximately 8% in aftermarket trading following the release of its fourth quarter 2024 financial results. The company, which specializes in technology-driven real estate services and currently has a market capitalization of $58.26 million, reported revenue that aligned with consensus estimates but fell short on adjusted EBITDA compared to Wall Street’s expectations. According to InvestingPro data, the company has seen its stock price decline by 76.6% over the past year, reflecting ongoing operational challenges.
The company’s guidance for the first quarter of 2025 indicated weaker than anticipated performance in terms of revenue, homes sold, and home acquisitions. This disappointing outlook has impacted investor sentiment, as reflected in the stock’s decline after the announcement. InvestingPro analysis reveals concerning trends, including a significant revenue decline of 43.75% in the last twelve months and weak gross profit margins of 7.95%.
Despite the challenging industry conditions that are affecting Offerpad’s business, JMP analysts remain optimistic. They highlight the company’s commitment to reducing costs, noting substantial savings achieved in the past two years. Offerpad managed to save around $70 million in 2023 and approximately $44 million in 2024. The firm anticipates these cost improvements to continue into 2025, which could help address the company’s substantial debt burden of $262.42 million identified by InvestingPro.
Offerpad has also been expanding its asset-light services, which accounted for 33% of the company’s contribution profit after interest in the fourth quarter. The Agent Partnership Program, which now accounts for nearly a third of property acquisitions, has been another area of progress for the company. This program has led to more efficient advertising and reduced customer acquisition costs.
Looking ahead, JMP analysts are keen to see when Offerpad will be able to increase its home acquisition pace, which they believe will be crucial for enhancing top-line growth. The analysts maintain that such improvements are key for Offerpad in its journey towards achieving an adjusted EBITDA breakeven point. Despite the current setbacks, JMP reiterated a Market Outperform rating and a $4.50 price target on Offerpad Solutions Inc. stock, falling within the broader analyst target range of $2.50 to $5.00. Based on InvestingPro’s Fair Value analysis, the stock currently appears slightly undervalued. Investors can access detailed financial health metrics and 18 additional ProTips for OPAD through a comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Offerpad Solutions Inc. reported its fourth-quarter 2024 earnings, with revenue reaching $174 million, aligning with the upper half of its guidance range. Despite this, the company experienced a net loss of $17.3 million for the quarter, which was a 12% year-over-year improvement. For the full year, Offerpad’s revenue was $919 million, reflecting a 30% decrease from 2023, while the net loss improved by 47% to $62 million. The company’s gross margin for the year increased significantly to 7.9%. Offerpad has projected its first-quarter 2025 revenue to be between $150 million and $170 million, with expected home sales ranging from 450 to 500 units. The company aims to achieve adjusted EBITDA breakeven by the end of the year. Additionally, Offerpad is expanding its buy box criteria to target higher-priced market segments. The company has also been engaged in discussions about potential capital raises to enhance its financial flexibility.
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