Why Opendoor Technologies Stock Is Soaring Today

Key Points

• EMJ Capital's Eric Jackson compared Opendoor to Uber and Airbnb on a Yahoo! Finance show.

• While there are parallels, there are also key differences.

• 10 stocks we like better than Opendoor Technologies ›

Shares of Opendoor Technologies (NASDAQ: OPEN) are jumping on Tuesday, up 6.5% as of 1:16 p.m. ET, and were up as much as 9.7% earlier in the day. The jump comes as the S&P 500 has lost 1.3% and the Nasdaq Composite has lost 1.5%.

The meme stock is on the move again today, continuing to climb after the investor largely responsible for kicking off Opendoor's original meme rally appeared on Yahoo! Finance's show "Opening Bid" last Thursday and called the company the "Uber of real estate."

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Could Opendoor be the Uber of real estate?

The head of EMJ Capital, Eric Jackson, made some pretty bold statements. He believes that Opendoor is in a unique position to transform the homebuying experience and become the go-to consumer platform for buying and selling real estate, much like Uber and Airbnb in their respective markets. He also believes that the company has a huge amount of data that it can use to leverage artificial intelligence, boosting efficiency in homebuying and reducing costs.

Image source: Getty Images

Jackson said on the program that real estate is a massive market ripe for "Uberfication," saying, "If you think about some of the great kind of e-commerce brands that have emerged in the last 10 years, I'm thinking of names like Uber, kind of revolutionizing how we, you know, take a taxi... You could turn [Opendoor] into a global brand if done right and, kind of, it becomes a verb."

Investors should exercise caution

While Opendoor could become ubiquitous, it has enormous hurdles to clear first. And Opendoor's business model includes buying and selling real estate itself, which makes the business incredibly capital-intensive. That's an important distinction between it and the other companies. It is currently unprofitable and heavily reliant on debt. I would avoid this stock.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Airbnb and Uber Technologies. The Motley Fool has a disclosure policy.