Opendoor's CEO Says Company So Far Had Thought Of Itself As Asset Manager Trying To Predict Economy: 'Our Leverage Comes From Engineers Writing Code'

• CEO Kaz Nejatian had succeeded Carrie Wheeler, who had stepped down following pressure from investors in August.
• Nejatian said that the company would spend money only on channels that provide a great return, and “we're going to stop spray and pray marketing.”
• The company said that margins will improve through the end of the year as Opendoor replaces its legacy inventory with better homes.

Opendoor’s New CEO, Kaz Nejatian, who took the helm in just over a month, noted in a post-earnings call that the old Opendoor began thinking of itself more as an asset manager, preoccupied with predicting the broader economy and losing faith in the power of software to make selling, buying, and owning a home easier.

“The previous Opendoor also didn't really believe in the power of AI to do anything, much less to make our work less toilsome ... We believe we're a software company, and our leverage comes from engineers writing code,” Nejatian said.

In early September, Opendoor named Shopify’s Chief Operating Officer, Nejatian, as the company’s new CEO, with co-founders Keith Rabois and Eric Wu returning to the board of Directors and Rabois taking on the role of Chairman.

Nejatian had succeeded Carrie Wheeler, who had stepped down following investor pressure in August.

Shares of Opendoor fell nearly 24% in premarket trading after the company’s third-quarter revenue fell and net loss widened.

Opendoor To Stop “Spray And Pray” Marketing

Nejatian said that the company would spend money only on channels that provide a great return, and “we're going to stop spray and pray marketing.”

“We believe slowing down buying homes just to buy them at a significant spread is a bad strategy … Opendoor is going to be kind of like a market maker in the future, not a prop desk,” he added.

Near-Term View

The company said that margins will improve through the end of the year as Opendoor replaces its legacy inventory with better homes, but the fourth-quarter contribution margin is expected to be below that of the third quarter, as it reverses the downward trend. 

“We are focused on continuing to manage and improve our cost structure,” Christy Schwartz, interim chief financial officer.

What Is Retail Thinking?

Retail sentiment on Opendoor improved to ‘bullish’ from ‘bearish’ territory compared to a day ago, with message volumes at ‘extremely high’ levels, according to data from Stocktwits.

Shares of Opendoor have risen 310% this year. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Also See: ‘Christmas Come Early’: AJ Bell’s Coatsworth On Sky’s Surprise Bid For ITV’s Media Arm

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