OPEN Alert: Monsey Firm of Wohl & Fruchter LLP Investigating Opendoor Technologies, Inc. for Potential Securities Law Violations
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MONSEY, N.Y., Sept. 21, 2022 (GLOBE NEWSWIRE) -- The law firm of Wohl & Fruchter LLP is investigating whether Opendoor Technologies Inc. (Nasdaq: OPEN) (“Opendoor”) has violated federal securities laws. If you suffered losses as a result of recent drops in the price of OPEN, and have questions about your legal rights, please contact us at the following link to discuss your options at no charge:
https://wohlfruchter.com/cases/opendoor-technologies/
Alternatively, you may contact us by phone at 866-833-6245, or via email at [email protected].
Why is there an investigation?
Opendoor makes instant offers to homeowners in a process known as “iBuying” using algorithms that purportedly enable Opendoor to accurately estimate home values.
On August 4, 2022, after the markets closed, the Chief Executive Officer (Eric Wu) and Chief Financial Officer (Carrie Wheeler) of Opendoor issued a letter (“August 4 Letter”) to shareholders indicating that “the housing market has moved rapidly in response to the Fed's aggressive rate hikes in an effort to curb inflation. This resulted in a steep increase in mortgage rates, which in turn catalyzed a slowdown in the rate of home transactions and lower levels of home price appreciation from all-time highs early in the year.”
The August 4 Letter, however, reassured Opendoor shareholders that “[o]ur investments in our platform have enabled an agile and low cost operating system that allows us to scale up and down gracefully across seasons and cycles,” and “[w]e are ready and well-positioned with our responsive pricing strategies, flexible operating model, low cost structure, and strong balance sheet to navigate near-term volatility and invest in the future of our platform.”
On a conference call after the markets closed on August 4, 2022, Ms. Wheeler reassured an analyst that even in the current volatile market “our systems are doing exactly what they're designed to do, which is responding very, very quickly, adjusting prices to market and we've been raising spreads and new acquisitions.”
On August 5, 2022, OPEN shares jumped 21.7% to close at $5.72 per share.
On September 19, 2022, however, Bloomberg cited industry data indicating that Opendoor had lost money on 42% of its transactions in August 2022 (as measured by the prices at which it bought and sold properties). Bloomberg reported that the data was even worse in key markets such as Los Angeles, where Opendoor lost money on 55% of sales, and Phoenix, where it lost money on 76% of sales.
Further, Mike DelPrete, a global real estate tech strategist, predicted in an interview that, based on his analyses, September is likely to be even worse for Opendoor than August. “Opendoor’s metrics are in the danger zone,” DelPrete stated. “They are very close to where Zillow was in its worst moments.”
In November 2021, Zillow had shut down its own iBuying unit after its algorithms consistently and significantly underestimated market changes.
After the Bloomberg report, OPEN stock dropped 4.43% to close at $3.88 on September 19, 2022. On September 20, 2022, OPEN stock fell another 8.25% to close at $3.56.
About Wohl & Fruchter Wohl & Fruchter LLP, with offices in New York City and Monsey, has for over a decade been representing investors in litigation arising from fraud and other corporate misconduct, and recovered hundreds of millions of dollars in damages for investors. Please visit our website, www.wohlfruchter.com, to learn more about our Firm, or contact one of our partners.
Contact: Wohl & Fruchter LLP Joshua E. Fruchter Toll Free 866.833.6245 [email protected] www.wohlfruchter.com
Source: Wohl & Fruchter LLP
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