Why Opendoor Stock Dropped 12% in January

Shares of Opendoor Technologies (NASDAQ: OPEN) stock fell 12% in January, according to data provided by S&P Global Market Intelligence. There wasn't any news specific to Opendoor's business, but the stock had soared on retail investor sentiment, and it's been slowly coming back to earth as it gets closer to the company's next earnings report.

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The real estate market is still down

Opendoor is using digital technology to disrupt the real estate industry. Its main business is iBuying, or buying up groups of homes, fixing them up, and reselling them. However, it has several ancillary businesses, including a marketplace and mortgages, and it envisions being a "one-stop shop" for all a buyer's needs.

As you might imagine, business has been tough in the high-interest rate environment. People who own houses aren't selling because they don't want to get back into the market and take on a high mortgage. There's lower inventory for those who do want to buy, keeping home prices high. Although interest rates have started to come down, the housing market has remained stubbornly pressured.

Opendoor's results have been disappointing over the past few years as it navigates a challenging environment. Revenue declined 34% year over year in the 2025 third quarter to $913 million, which is quite low considering the company sells houses. It sold 2,568 homes, down from 3,615 the year before, and it ended the quarter with 3,139 homes in inventory, down from 6,288 the year before. Gross margin fell from 7.6% to 7.2%, and it reported a $61 million net loss.

Meme stocks and price pops

Opendoor stock had been in the dumps, but retail investors pushed it higher in 2025. The price pop led to a CEO change, and the new CEO, Kaz Nejatian, has laid out a far-reaching plan to turn things around despite the grim environment. The plan has three main components, which are to scale acquisitions, speed up turnover, and become more operationally efficient. He plans to make more use of artificial intelligence (AI) to speed things up, and he wants to focus on volume instead of spread.

Opendoor stock has remained elevated since the CEO switch, but it's been dropping slowly as it gets closer to the fourth-quarter earnings report. The stock is quite cheap, trading at 0.9 times trailing 12-month sales, but the price matches the risk. Expect the price to jump if the company has positive news for investors when it releases fourth-quarter earnings next week.

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.