Opendoor (OPEN) downgraded on slower-than-expected 3P ramp

Oppenheimer analyst Jason Helfstein downgraded Opendoor (NASDAQ: OPEN) to Perform from Outperform, removing the firm's price target on Monday.

The analyst said in a research note that he downgraded Opendoor based on a slower than previously disclosed 3P ramp, while the "lower-margin 2Q22 cohort continues to handicap margins." 3P is the company's product offering, introduced in November, that directly connects buyers and sellers of a home.

"Overall, we do not see investors supporting the stock until 3P becomes the main growth driver of transactions," stated Helfstein. "2Q22 cohort sell-through 66%, targeting >85% by Mar. 31 and return to positive unit margins by 2H23. While homes purchased post-2Q22 generated 9.7% contribution margin, they represented just 9% of 4Q rev. and margin will decline as inventory matures."

The analyst added that with management "significantly slowing purchases," they see limited visibility into sales volume after the second quarter 2022 cohort sold off.

Opendoor shares are currently up around 1.9% premarket.

By Sam Boughedda

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