What a difference two years makes. Two years ago, Opendoor (Nasdaq: OPEN) was in trouble, with its main financial backer SoftBank backing out, just as Opendoor was preparing to make a major push in the spring of 2020. Then the pandemic hit. Like others in the iBuying space, Opendoor suspended operations and laid off a big portion of its workforce in April of that year.
But Eric Wu continued to lead the company through difficult times, showing courage and leadership by, for example, donating his entire salary to a relief fund for employees. He then engineered a deal with notable investor, Chamath Palihapatiya, and took Opendoor public via SPAC, at a valuation north of $6 billion. Impressive.
Opendoor’s third quarter 2021 earnings show just how much the company has grown:
- $2.3 billion in revenue, up 91 percent from the second quarter 2021.
- $202 million in gross profit, up from $159 million in the second quarter 2021.
- 5,988 homes sold and 15,181 homes purchased
- $1.8 billion in cash.
- $17 million net loss, down from $144 million net loss in the second quarter 2021.
An important metric, contribution profit, which speaks to how much each home sold contributed to the bottom line, rose to $170 million with a profit margin of 7.5 percent in the third quarter. This means that Opendoor is making money on its core business of buying homes, fixing them up lightly, and then reselling them. Its losses are coming from continued overhead from investing in technology and teams to keep growing. The investors, especially Social Capital, are just fine with that.
With the withdrawal of Zillow Group from the iBuying business, Opendoor now reigns supreme as the top player in one of the important iBuying market. The remaining market-makers, Offerpad and Redfin, are far smaller with slightly different business models. Of course, the challenge for Wu is to allay skepticism and fears about the iBuying business model itself. Yet, if Opendoor keeps posting results as it has throughout 2021, it’s a matter of when, not if, Wu and team will deliver on the name of the original secret project behind Opendoor: Project Homerun. As one of only two under-40 CEOs on the SP 200 Top 10 list, Wu is also routinely described as self-effacing, humble, and down-to-earth leader. His steady climb on the SP 200 (No. 163 in 2016, breaking in the top 100 three years later in 2019 and reaching No. 10 last year) reflects the company’s steady growth. He has proven again that he deserves being one of the top 10 most powerful people in residential real estate.