This Stock Is Down 81%. Is It a Buying Opportunity or a Value Trap?

Opendoor Technologies (NASDAQ: OPEN) might win the award for the 2025 meme stock of the year. But although it gained 264% last year, it's still 81% off its all-time highs.

Is this the right time to buy? Or is it a value trap? Let's take a look.

Digital homebuying and selling

Although several companies threw their hats into the iBuying ring, seeing the opportunity to transform the homebuying process, they have mostly pulled out of what became an expensive, money-losing business as interest rates soared. Opendoor remains standing, and investors had mostly given up on the company in the stagnating real estate climate.

Image source: Getty Images.

The potential looks clear. Opendoor makes the process easier for sellers, and it relies on artificial intelligence (AI) and machine learning algorithms to find good homes and price them correctly. It has a marketplace, as well as relationships with other online marketplaces and live agents to move inventory. In a better environment, there's real potential for a great business.

But the climate has been pressured for a while now, and Opendoor's situation has been precarious. In the 2025 third quarter, revenue declined 34% year over year, while adjusted net loss was $61 million. The company sold 2,568 homes, down from 3,615 the year before, and had only 3,139 in inventory at the end of the quarter, down from 6,288 at the end of Q3 2024.

Is now the time to buy Opendoor stock?

Opendoor stock soared on a social media campaign, and the company recently got a new CEO, so there's momentum. However, it's already 38% off its highs over the past year.

The new CEO, Kaz Nejatian, has laid out a compelling turnaround plan, focusing on volume instead of spread, and using more technology to take care of repetitive tasks. He gave measurables to demonstrate responsibility and results, and that inspires confidence. He's also aiming for net income breakeven by the end of the year.

I'm intrigued by his position and look forward to seeing what happens. If interest rates do come down, there's a good chance that the new strategy could lead to positive results, and in the long term, Opendoor could emerge as a winner.

However, there's a lot of risk in buying Opendoor stock where it's holding today. It could definitely be a value trap. I'd wait to see if the company shows significant progress before buying Opendoor stock.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.