Recently, investors are focusing on OpenDoor, a digital real estate corporation, which is leading the 'meme stock' craze on the New York Stock Exchange. Meme stocks refer to stocks that experience extreme fluctuations in value driven by individual investors' word-of-mouth on social media (SNS), regardless of the corporation's performance or value.
On the 23rd (local time), OpenDoor closed at $2.29 per share on the New York Stock Exchange. Just a month ago, on the 23rd of last month, OpenDoor's share price was only $0.53, but on the 21st, it surged to $3.21 per share. This marks a staggering 500% increase in just a month.
Transaction volumes are also fluctuating. According to a report by CNBC, as of the 21st, OpenDoor's stock trading volume was about 1.9 billion shares, an increase of 1700% compared to the three-month average. At that time, OpenDoor's share price was $3.21, soaring 43% from the previous day, and trading was halted several times during the session due to increased volatility.
Founded in 2014 in San Francisco, OpenDoor allowed Americans to buy and sell dwellings through its platform and generated revenue through brokerage fees. The corporation went public in 2020 via a special purpose acquisition company (SPAC) with the support of billionaire investor Chamath Palihapitiya.
OpenDoor was once a corporation that attracted attention with a share price reaching $35 and a market capitalization exceeding $15 billion. However, the housing market deteriorated after the COVID-19 pandemic, leading to poor performance, and in May, it received a delisting warning from Nasdaq. At that time, OpenDoor's share price was less than $1.
The drastic increase in OpenDoor's share price, which faced a delisting crisis, is attributed to Eric Jackson, founder of hedge fund EMJ Capital, who has been actively posting buy recommendations for OpenDoor on X (formerly Twitter) and Reddit. Jackson stated that OpenDoor will record its first positive earnings before interest, taxes, and amortization (EBITA) next month, setting a target price of $82.
Business Insider reported, "An unexpected turnaround has occurred for a digital real estate corporation once considered a 'penny stock' discarded by Wall Street post-SPAC listing in 2020," adding, "The X posts of hedge fund managers, enthusiastic individual investors, and the Reddit stock board 'WallStreetBets' have created a new meme stock."
Concerns have been raised that the fluctuations in OpenDoor's stock resemble the 'GameStop incident' of 2021. This is due to individual investors buying up shares in response to institutional investors' short-selling activities, causing the stock price to swing. OpenDoor also has over 22% of its circulating shares in a short position, exhibiting the typical characteristics of a 'meme stock.'
Given that the stock price surged independently of corporate performance, there is a significant possibility that OpenDoor's stock will plummet again once buying pressure subsides. The price of GameStop shares, which was around $4 at the beginning of 2021, soared to $81 at one point but is currently trading in the $24 range. OpenDoor's shares have already dropped about 10% in just one day on the 22nd and fell roughly 20% on the 23rd.