Hard-Hit Opendoor (OPEN) Stock Falls on C-Suite Shakeup
It’s been a difficult season for Opendoor (NASDAQ:OPEN) stock, and it isn’t over yet. Last month, the real estate flipping platform announced plans to lay off 18% of its workforce. This put it in the same category as many other tech companies that have opted for job cuts amid a troubling economic landscape.
Since then, however, OPEN stock has been highly turbulent while mostly trending downward. Yesterday, it plunged even further after the company announced some important changes at its executive level. Carrie Wheeler, former chief financial officer of Opendoor will be taking over as CEO while Eric Wu transitions to the role of president, marketplace. WU is one of the company’s top investors, with a stake in OPEN stock worth roughly 5%.
Let’s take a closer look at what companies can expect from Opendoor as it prepares for a major shift.
What’s Happening With OPEN Stock
Since news broke of the change, OPEN stock has been sliding. As of this writing, it is down 6% for the day, taking its losses for the week down more than 14%. Given how much volatility the real estate market has faced in 2022, it’s hardly surprising that companies in the space have struggled considerably. Both experts and consumers have pondered the question of if it will bounce back in 2023. As InvestorPlace contributor Chris MacDonald reports, most statistical indicators suggest that it will not.
Does this mean that investors should disregard a company like Opendoor? Let’s examine the stock in context. It’s true that real estate stocks have given investors plenty of cause for concern throughout 2022. The questionable real estate market certainly isn’t helping. That said, layoffs can sometimes benefit stocks. Job cuts on their own are not usually enough to generate growth. But as InvestorPlace has reported, job cuts can ultimately help boost a stock if the company also makes important structural changes.
That seems to be exactly what Opendoor is doing. After a difficult year, it is making a change in leadership and appointing a new CEO who knows the company well. At the same time, it is keeping the former CEO on board and transitioning him to a new role. Wheeler issued the following statement:
“We will be focused on continuing to drive operational excellence, enhancing our unit economics, and delivering a best-in-class customer experience. Furthermore, we are excited to continue to innovate and empower Eric to drive the development of our third-party marketplace.”
One benefit to appointing a new CEO from within is that it can allow a company to move forward more smoothly. Not having to get to know an entirely new leader can help an executive team continue making progress without missing a beat. Opendoor knows that, and it has now appointed a new leader whose financial background can help the company navigate a complicated industry landscape.
The Bottom Line
It’s important for investors to see the recent performance of OPEN stock as a reflection of the current market, not as a response to its new leadership. Other real estate stocks such as Redfin (NASDAQ:RDFN) and Dream Finders Home (NYSE:DFH) are struggling today as negative market momentum pushes the entire sector down.
That doesn’t mean that these stocks can’t rebound, though, especially if they are making important structural changes. Opendoor is working hard to ensure a turnaround in 2023 regardless of how the real estate market performs.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.
More from InvestorPlace