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Investing.com -- Opendoor Technologies Inc. (NASDAQ:OPEN) stock pared early gains from 7% to approximately 3% on Friday following a bearish post on social media from Citron Research that criticized the company’s business model.
The short-selling research firm issued a scathing critique of the online real estate platform, describing it as "nothing more than a stock promo and a science project in how to burn money." Citron’s report outlined several fundamental concerns about Opendoor’s business model.
According to Citron, Opendoor faces multiple challenges including an inability to leverage AI to improve margins or defend market share, the inherently low-margin nature of housing where a 1-2% swing can eliminate profits, and the capital-intensive requirement of maintaining billions in property inventory without guaranteed resales.
The research firm also highlighted competitive pressures, noting that "Zillow already tried & failed at this model." Citron further warned about potential shareholder dilution due to Opendoor’s ongoing cash burn.
Citron concluded its bearish assessment by stating that Opendoor’s "business model is not broken....it has never worked."
Despite the negative report, Opendoor shares managed to hold onto some of their early gains, suggesting mixed investor sentiment regarding the company’s prospects in the challenging real estate market.
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